Labor Department turns back clock to 2019

A Texas judge, and now the Trump administration’s Labor Department — have torpedoed a Biden administration rule that updated overtime protections. 

Under the Fair Labor Standards Act of 1938, workers are entitled to be paid “time-and-a-half” for any hours they work beyond 40 hours a week for an employer. But there are exceptions, and one of the exceptions is for executive, administrative, or professional employees — when they’re paid a salary instead of by the hour. 

Historically the Department of Labor developed rules to guard against abuse of that exemption. For example, before they can be considered exempt from overtime, an manager or professional employee must earn above a certain salary. But that dollar threshold has often gone many years without being updated for inflation. The threshold stayed at $23,660 a year from 2004 until 2016 when the Obama administration raised it to $47,476. But a federal judge in Texas blocked that increase. In 2019, during Trump’s first term, the Labor Department increased it to $35,568. The Biden Labor Department issued a new rule raising it to $43,888 and indexing it to inflation thereafter, but the state of Texas sued to block the law. Once again a federal judge in Texas knew better than the Labor Department, and struck it down. The Biden administration appealed that decision, but the second Trump administration halted the government’s legal defense of the rule. On May 14, the Trump Labor Department formally announced it’s going back to the 2019 rule: $35,568. If that amount had been adjusted for inflation, it would be $47,057 today.

The change means more than four million workers will lose the right to overtime pay because they’re deemed “salaried” by their employer.