In April, Acting Secretary of Labor Julie Su, National Economic Advisor Lael Brainard, and Domestic Policy Council Director Neera Tanden hosted a White House event to announce new rules aimed at bolstering workers and providing growth to the American economy “from the bottom up and the middle out.” 

One rule, which expands overtime protections for workers, took effect this month.  

The first of the Department of Labor’s (DOL) new rules stipulates that employers must pay overtime to salaried employees who make less than $43,888 per year (protecting 1 million additional workers) in select administrative, executive, and other professional roles. This is a significant change from the Trump Administration’s 2019 rule update, where the threshold was $35,568. Under Biden’s new rule, the threshold will be $58,656 (another 3 million workers) at the start of 2025 and will increase every following three years. 

According to Biden’s official statement, “That means higher paychecks and more time with family for millions of Americans. While Republicans side with big corporations and special interests on Park Avenue to try to deny workers these protections, I will always side with hardworking families like the ones I grew up with in Scranton.”  

Back in April, advocates quickly praised the rule while pointing out it was long overdue. Heidi Shierholz, President of the Economic Policy Institute, told the Associated Press, “The rule is an important step toward correctly valuing one of the most precious resources workers have—their time…[it] is an essential milestone in creating a stronger, fairer economy.”  

However, the plan has also faced criticism. The National Association of Home Builders has been following the rule closely since its proposal, urging the administration to “consider alternatives” what they call a “one-size-fits-all approach” and recently uniting with a coalition of business groups in a lawsuit asserting the DOL “exceeded its statutory authority.” Furthermore, in December, the Heritage Foundation published a report warning the rule would reduce workplace benefits, raise prices, reduce paid time off, reduce base pay, eliminate jobs, expedite the pace of automation, and restrict hours.  

Those on the side of labor tell a different story. AFL-CIO President Liz Shuler released a statement in support of the policy development: “This is one more example of the Biden administration delivering on its promises to prioritize the needs of working people,” she said. Employers unwilling to pay “additional overtime will now no longer be able to rely on unpaid overtime;” thus, they must amend the “way they distribute workloads to their employees.” 

Employers, Shuler said, now have the burden of “taking the high road and hiring additional staff or promoting workers from part-time to full-time status.”  

However, the fight is not over. Shuler adds that “while today is a step forward, we know that millions of working people are putting in more than 40 hours per week without being fairly compensated…Employers use loopholes in our flawed wage system to deny overtime pay to their employees. For millions of families across our country, access to overtime wages would make an enormous difference, and we will continue to advocate for fair pay for all.” 

The fight will also come in the courts, where the Biden Administration proposal already faces challenges. Just last week, a federal judge in Texas granted a preliminary injunction to block the new DOL rule. The court’s action – which so far only applies in Texas – came just days after the U.S. Supreme Court overturned the Chevon doctrine, which enabled federal agencies to “reasonably interpret” the laws they enforce; the federal judge cited Loper Bright in his decision, which is the Supreme Court ruling issued on June 30 that helped overturn Chevron. 

The federal judge ruled that the DOL exceeded its authority under the Administrative Procedure Act because the Fair Labor Standards Act’s executive, administrative, or professional (EAP) exemption is based on the salaries of employees and not their job duties. 

The judge’s ruling almost surely will be appealed to the 5th Circuit Court of Appeals, a conservative court that has jurisdiction over cases that arise out of Texas.