Federal Court Blocks Biden's Overtime Expansion: What Employers and Workers Need to Know

In a decision affecting millions of American workers, a federal court in Texas has struck down the Biden administration's attempt to expand overtime pay protection. The ruling, issued by U.S. District Judge Sean Jordan, effectively maintains the current salary threshold at which workers become eligible for overtime pay at $35,568 annually, rather than allowing it to increase to nearly $59,000 as the administration had planned.

Understanding Overtime Pay: The Basics

Before delving into the court's decision, it's important to understand how overtime pay works in America. The Fair Labor Standards Act (FLSA) requires employers to pay most workers time-and-a-half for any hours worked beyond 40 in a week. However, the law includes important exceptions for certain white-collar workers, known as "exemptions."

These exemptions were originally designed to exclude high-level executives, administrators, and professionals from overtime requirements. To be considered exempt from overtime pay, an employee must pass three tests. First, they must be paid a salary rather than an hourly wage. Second, their salary must meet a minimum threshold (currently $35,568 per year). Third, their actual job duties must primarily involve executive, administrative, or professional work.

For example, a retail store manager who earns $40,000 annually and spends most of their time supervising employees and managing operations might be exempt from overtime. However, if that same manager spends most of their time stocking shelves or running a cash register, they might not qualify for the exemption despite their title.

The Biden Administration's Attempted Changes

The Department of Labor under President Biden sought to dramatically expand overtime protection by raising the salary threshold in two stages. The first increase, which took effect in July 2024, raised the minimum to $43,888. The second stage would have pushed it to $58,656 in January 2025. The rule also included a provision for automatic increases every three years to keep pace with wage growth.

The administration estimated these changes would have extended overtime protection to roughly 4 million additional salaried workers. For these workers, the change would have meant either additional pay for extra hours worked or a limit on their work weeks to 40 hours.

The Legal Challenge

The lawsuit that stopped the overtime rule was filed by the State of Texas along with a coalition of business groups, including the National Retail Federation. This wasn't a random choice of venue or plaintiffs. Texas and business organizations strategically chose to file in the Eastern District of Texas, a court that had previously struck down a similar Obama-era overtime rule in 2016.

The choice of this particular court reflects a well-established legal strategy. The Eastern District of Texas has historically been receptive to challenges against federal regulations, particularly those involving labor and employment issues. Additionally, cases filed in this district can reach the Fifth Circuit Court of Appeals, which has often been skeptical of expansive federal regulatory authority.

The plaintiffs argued that the new rule would create substantial burdens for businesses, potentially forcing them to cut jobs and reduce work schedules. The National Retail Federation, representing one of America's largest employment sectors, claimed the rule would severely limit retailers' ability to offer flexible benefit packages to lower-level exempt employees. They also argued that the increased payroll costs would harm businesses still recovering from the economic impacts of the pandemic.

Texas's involvement as a lead plaintiff was particularly significant. As a state employer, Texas argued it would face millions in additional payroll costs, giving it standing to challenge the rule. This state-level involvement helped transform what might have been seen as primarily a business issue into a question of federal government overreach, a framing that resonated with the court's previous decisions on federal regulatory authority.

The timing of the lawsuit was also strategic. The plaintiffs initially secured a preliminary injunction that blocked the rule from taking effect in Texas just before its July 1 implementation date. This early victory set the stage for the broader challenge that resulted in Judge Jordan's nationwide ruling.

The Court's Decision

Judge Jordan's ruling centered on a fundamental question: Did the Labor Department overstep its authority? The court concluded that it did. The judge found that by setting such a high salary threshold, the Department had effectively created a "salary-only" test for overtime exemption, pushing aside the equally important consideration of an employee's actual job duties.

This isn't the first time such an expansion has been blocked. In 2016, the Obama administration attempted a similar increase, which was stopped by the same court. The current threshold of $35,568 was set during the Trump administration in 2019, marking the first increase since 2004.

What This Means for Workers and Employers

For workers, the immediate impact is clear. Millions who would have gained overtime protection will remain exempt if they meet both the current salary threshold and the duties test. This particularly affects middle-management employees in retail, restaurants, and other service industries who often work well beyond 40 hours per week without additional compensation.

Employers who had already begun implementing changes to comply with the July 2024 threshold face a decision. While they can legally revert to the lower threshold, employment law experts advise careful consideration before reducing any employee's salary or changing their overtime eligibility. Some employers may choose to maintain the higher salaries to retain employees and maintain morale.

It's crucial to note that several states, including California, New York, and Washington, have their own, higher salary thresholds for overtime exemption. Employers in these states must continue to comply with these more stringent requirements regardless of the federal court's decision.

Looking Forward

The Department of Labor has not yet announced whether it will appeal the decision. However, this ruling highlights the ongoing tension between efforts to modernize labor standards and concerns about business costs and flexibility. Worker advocacy groups argue that the current threshold is far too low, leaving many modestly paid employees working long hours without extra compensation. Business groups counter that higher thresholds would force them to reduce jobs and limit flexible work arrangements.

For now, employers must continue to navigate the complex requirements of overtime law, ensuring they properly classify employees based on both their salaries and their actual job duties. Workers, meanwhile, should understand their rights under both federal and state law, particularly if they live in states with more protective overtime requirements.

The overtime debate underscores a broader question facing American workplaces: How do we balance fair compensation for workers with the operational needs of businesses? While this court decision provides a clear answer for now, the discussion is far from over.

Expected Changes in Employment Law Under President Trump’s Second Term

As President Donald Trump reclaims the White House, employers and employees alike anticipate significant shifts in labor policies. Based on his previous term and campaign promises, these changes could impact areas such as workplace regulations, immigration, and diversity initiatives.

1. Regulatory Reforms and Agency Leadership

One of the hallmark changes expected involves regulatory slowdowns and a pivot in leadership at key labor agencies, such as the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC). Under Trump’s administration, agency chairs aligned with pro-business views are likely to oversee policy. This change signals potential reversals of Biden-era regulations on overtime, independent contractor definitions, and more. While some proposed rules from the current administration were met with court challenges, a rollback of these initiatives is probable, resulting in reduced compliance burdens for employers but potentially fewer protections for workers.

2. Influence of Trump-Appointed Judges on Employee Rights

The appointment of federal judges during Trump’s presidency will have long-lasting implications for employment law. These judges, typically aligned with conservative interpretations of statutes, may affect the outcomes of key employment cases. Courts could lean towards stricter interpretations of laws governing collective bargaining, workplace discrimination, and employer liabilities. This could result in a judiciary less receptive to expansive interpretations of worker protections under the Fair Labor Standards Act, Title VII of the Civil Rights Act, and other regulatory frameworks. Employers might experience a more favorable legal climate, whereas employees may find it harder to win cases involving broad labor rights or discrimination claims.

3. Immigration Policies and Workforce Impacts

Immigration policy will be a central focus, with a renewed emphasis on enforcement through measures like workplace raids and an increase in I-9 audits. The construction, hospitality, and manufacturing sectors, which rely heavily on immigrant labor, may experience workforce disruptions due to stricter regulations and potential deportations. A clampdown on immigration is expected to lead to tighter labor markets, particularly in industries dependent on a diverse workforce.

4. DEI Initiatives Under Scrutiny

Diversity, equity, and inclusion (DEI) efforts face new challenges under Trump’s administration. His previous term saw the curtailment of DEI training in federal settings, and similar initiatives might extend to private-sector businesses, especially those connected to federal contracts. The EEOC, under anticipated leadership changes, could narrow the scope of permissible DEI programs, placing certain corporate training initiatives under heightened scrutiny. Such actions could affect how organizations approach inclusion and diversity policies to remain compliant.

5. Worker Rights and Union Relations

Trump’s complex relationship with labor unions and worker rights is set to continue, with potential limitations on union organizing. Policies to make it easier for employers to deter union activities may resurface, reflecting previous administration tactics aimed at reducing collective bargaining power. Conversely, legislative support for voluntary negotiations between employees and employers, as highlighted by proposals like the Teamwork for Employees and Managers Act, may develop, fostering alternative dialogue frameworks that bypass traditional union channels.

6. Wage Policies and Worker Benefits

President Trump has shown ambivalence toward federal wage increases, having previously supported and then retracted positions on minimum wage hikes. The current landscape suggests that while direct action on wages may be limited, policies affecting tipped wages and overtime pay might emerge. The elimination of taxes on tipped wages is one such proposal, appealing to service industry workers but raising questions about potential revenue impacts on public programs. Proposals for family leave, advocated by figures like Vice President-elect J.D. Vance, may offer targeted benefits for working parents, signaling nuanced shifts toward supportive benefits without comprehensive legislative change.

7. Economic and Industry-Specific Policies

Economic strategies under Trump’s presidency are likely to prioritize domestic job creation through tariffs and fossil fuel initiatives. A proposed blanket tariff on imports aims to boost American manufacturing but poses risks of supply chain disruptions and cost increases. Sectors tied to renewable energy may also feel the strain as federal focus shifts toward traditional energy sources like oil and coal.

Conclusion

President Trump’s second term presents an employment landscape marked by pro-business reforms, a tougher stance on immigration, reevaluated DEI programs, and selective economic policies. While some measures may simplify regulatory compliance for employers, they also pose challenges, including potential workforce shortages and heightened scrutiny over diversity initiatives. Both employers and employees will need to stay vigilant and adaptable as these anticipated changes unfold, shaping the next phase of workplace dynamics in the United States.

Companies Continue to Illegally Require Employees to Be 100% Healed Before Returning to Work

I continue to be surprised by the number of companies that refuse to accommodate workers who have disabilities or who are returning from medical leave. Requiring an employee to be “100% healed” with no medical restrictions is nearly always a violation of the the ADA.

EEOC Sues FedEx For Disability Discrimination

The Federal Express Corporation (FedEx), a global shipping and logistics company, violated federal law when it failed to provide reasonable accommodations for qualified, disabled ramp transport drivers with medical restrictions, and instead forced them to take unpaid leave or fired them, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit filed today.

— EEOC Release

EEOC Sued for Employment Discrimination

In a striking turn of events, the U.S. Equal Employment Opportunity Commission (EEOC) finds itself on the receiving end of a discrimination lawsuit. An employee with 24 years of service has filed a complaint against the agency, alleging violations of the very law it is tasked to enforce - Title VII of the Civil Rights Act of 1964.

The case, Kandan v. Burrows, EEOC, was filed in the Eastern District of Lousiana on August 26th. The Complaint alleges discrimination based on gender, race and national origin.

This case is particularly noteworthy given the EEOC's role as the federal agency responsible for enforcing civil rights laws in the workplace. It underscores that no organization is immune to allegations of discrimination and highlights the importance of fair and transparent promotion practices.

10,000 workers at 25 U.S. hotels were on strike Monday. More could be joining them.

One of the worst side effects of the Covid times has been companies attempting to continue to do with less paying work for workers even after the economy came back online.

From AP via ABC:

“Some 10,000 hotel workers represented by UNITE HERE union union walked off the job Sunday at 24 hotels in eight cities, including Honolulu, Boston, San Francisco, San Jose, San Diego and Seattle. They remained on strike Monday, and hotel workers in other cities could join in the coming days as contract talks stall over demands for higher wages and a reversal of service and staffing cuts.”

7th Circuit Upholds Jury Verdict Against Walmart for Discrimination Against Worker with Down Syndrome

The Seventh Circuit Court of appeals rejected Walmart’s appeal, holding that the “jury heard sufficient evidence to find Walmart violated the Americans with Disabilities Act when it changed its scheduling policy and failed to accommodate an employee with Down syndrome who had difficulty adapting to her new hours, the 7th U.S. Circuit Court of Appeals held Aug. 27. (EEOC v. Wal-Mart Stores East, L.P.)” Read opinion here.

“The employee, a sales associate in Wisconsin for more than 15 years, worked an afternoon shift so she could catch a bus to and from work, according to court documents. After she was given an adjusted, slightly later shift, she repeatedly expressed confusion and asked for her old shift back, the documents said. She also often left early — the same time as before to catch her bus — or missed work altogether. After multiple absences and coaching, Walmart fired her.” — via HRDive

The jury awarded $125 Million in punitive damages, which was reduced to $300,000 by statutory caps.

Walmart's $44M Settlement: A Win for Employee Rights in COVID-19 Workplace Measures

In a significant victory for workers' rights, Walmart has agreed to a $44 million settlement in a class-action lawsuit concerning uncompensated time for mandatory COVID-19 screenings. This case highlights crucial issues in wage and hour law, particularly in the context of pandemic-related workplace safety measures.

The Lawsuit and Its Implications

The lawsuit, filed in November 2020, alleged that Walmart violated California labor laws by failing to compensate employees for time spent on mandatory pre-shift COVID-19 screenings. These screenings, which included temperature checks and health questionnaires, added several minutes of unpaid time to employees' workdays.

This case underscores a critical principle in employment law: time spent on mandatory work-related activities should be compensable. The settlement serves as a reminder that employers must carefully consider whether health and safety measures constitute work time under applicable laws.

Settlement Details and Employee Impact

The $44 million settlement will benefit over 250,000 current and former Walmart employees in California. While Walmart has not admitted wrongdoing, this resolution avoids protracted litigation and sets a notable precedent for similar cases.

For affected employees, this settlement not only provides financial compensation but also validates their right to be paid for all work-related activities, including those implemented for workplace safety during extraordinary circumstances like a pandemic.

Legal Implications and Future Considerations

This case exemplifies the importance of collective action in addressing workplace issues. It demonstrates how class-action lawsuits can effectively challenge large corporations and enforce labor laws on a broad scale.

The settlement raises important questions for both employees and employers:

1. What constitutes compensable work time, especially in the context of health and safety measures?

2. How should employers implement necessary safety protocols while ensuring compliance with wage and hour laws?

3. What rights do employees have regarding compensation for time spent on mandatory workplace activities outside of regular duties?

Moving Forward: Advice for Employees and Their Representatives

1. Stay Informed: Employees should familiarize themselves with their rights under federal and state labor laws, particularly regarding compensable time.

2. Document Time: Keep detailed records of all time spent on work-related activities, including health screenings or other mandatory procedures.

3. Communicate Concerns: If you believe you're not being compensated fairly, raise the issue with your employer or HR department.

4. Seek Legal Advice: If concerns persist, consult with an employment law attorney to understand your options.

5. Consider Collective Action: This case demonstrates the power of collective legal action in addressing systemic workplace issues.

For employment lawyers, this case emphasizes the need to stay vigilant about emerging workplace practices, especially those arising from extraordinary circumstances like the COVID-19 pandemic. It also highlights the potential for class-action lawsuits to effect significant change in employment practices.

This settlement serves as a reminder that even as workplace norms evolve, the fundamental principles of fair compensation and adherence to labor laws remain paramount. It underscores the ongoing need for robust legal representation to protect and advance employee rights in an ever-changing work environment.

DOL Achieves Paltry Result for Wrongful Termination Victim

Last week the U.S. Department of Labor issued a press release, touting its settlement with a corporate-owned location of Whataburger Restaurant LLC. The agency alleged that the company failed to provide reasonable break time for an employee to express breast milk as required by the Fair Labor Standards Act. Investigators also determined that, when the employee left the premises to express milk, the employer terminated the employee.

To resolve the violations, the San Antonio-based franchisor signed an Enhanced Compliance Agreement stating it will provide FLSA training to all managers in the future. In addition, the company has agreed to pay the employee $1,800.00 to resolve the claims.

Generally, the DOL only investigates companies for violations of pay laws, like the Fair Labor Standards Act. It leaves it to the EEOC to investigate and prosecute companies for claims of sex or pregnancy discrimination under Title VII of the Civil Rights Act. In order to achieve full justice, an employee may need to purse remedies under both sets of laws. But the agencies cannot.

It is not clear from the press release whether this employee was also able to pursue pregnancy discrimination claims under Title VII for the alleged misconduct. However, in my experience, the agencies rarely work together to achieve full justice in these types of situations. And that’s a shame because the remedy available under the DOL’s FLSA statute is much weaker than what could be achieved under Title VII.

The Fair Labor Standards Act (FLSA) and Your Right to Break Time

The FLSA, as amended by the Affordable Care Act in 2010, provides a specific provision for nursing mothers, known as the "Break Time for Nursing Mothers" rule. This rule states that your employer must provide "reasonable break time for an employee to express breast milk for her nursing child for one year after the child's birth each time such employee has a need to express the milk." Moreover, employers must also provide a suitable place, other than a bathroom, that is private and free from intrusion for this purpose. Unfortunately, however, the damages available to employers under this statute can be quite limited, especially if the employee is not a high wage earner.

Title VII and Pregnancy Discrimination Act (PDA) - What They Mean for You

Title VII prohibits discrimination on the basis of race, color, religion, sex, or national origin. In 1978, the PDA amended Title VII, explicitly prohibiting sex discrimination due to pregnancy, childbirth, or related medical conditions. This law ensures that pregnant women and those affected by related conditions must receive the same treatment as other employees who have similar work abilities or limitations.

How Title VII and PDA Protect Nursing Mothers

While neither Title VII nor the PDA specifically mention lactation or breastfeeding, these laws have been interpreted by courts and the Equal Employment Opportunity Commission (EEOC) to offer protections for nursing mothers. The EEOC, which enforces Title VII, has asserted that lactation is a medical condition related to pregnancy and therefore protected. Consequently, if your employer discriminates against you because you are breastfeeding or expressing milk, you may have grounds for a discrimination claim. Unfair treatment due to breastfeeding can also be regarded as sex discrimination under Title VII and the PDA. Employer refusal to allow sufficient time or a safe place for new moms to pump is an all-to-common problem.

Why Advertise A Bad Result?

The real question is why DOL felt like this result was something that should be advertised via a press release. Most private attorneys would consider $1,800 to be a terrible result for the client. It is really abysmal. Employers are not encouraged to take employment laws seriously if all the power and resources of the federal government can bring no more than a slap on the wrist.

If the DOL is going to be in the business of simply issuing miniscule fines to companies that break civil rights laws, perhaps they should just close up shop and go home. Or at the very least, don’t brag about it.

Know Your Rights

As a working mother, it's crucial to know your rights and ensure you're treated fairly in your workplace. These laws are in place to protect you and enable you to balance your work responsibilities with your role as a new mother.

If you feel that your rights under Title VII, the PDA, or the FLSA are not being respected, seek legal counsel to explore your options. Maintaining a healthy balance between your work and personal life is not just a personal issue, it's a legal right, and there are resources available to you to ensure that balance is achieved.

Employers Not Allowed to Hide Discrimination Through Use of a Staffing Company

Conduent State and Local Solutions, Inc., the operator of the New York E-ZPass toll collection system, and Broadleaf Results, Inc., an employment agency, have reached a settlement agreement of $120,000 and other relief in a disability discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC). The case not only highlights the issue of disability discrimination but also raises important questions about joint employment and the responsibilities of client employers and staffing agencies under the Americans with Disabilities Act (ADA). The settlement aims to rectify the alleged violations and includes both monetary and non-monetary provisions to prevent future discrimination.

The Lawsuit

The lawsuit, filed by the EEOC in the U.S. District Court for the Eastern District of New York (EEOC v. Broadleaf Results, Inc. and Conduent State and Local Solutions, Inc., Civil Action No. 1:22-cv-4557-PKC-LB), revolves around an employee who was terminated after requesting an accommodation for her hearing-related condition. The employee was placed by Broadleaf to work as a customer service representative at Conduent's E-ZPass Customer Service Center in Staten Island, N.Y. When she experienced difficulties hearing customer calls, she promptly informed both Broadleaf and Conduent supervisors and requested a reasonable accommodation. Additionally, she sought a meeting with management to discuss the status of her accommodation request. Unfortunately, a Broadleaf manager responded by stating, "If you cannot hear, then you can't do the job," resulting in immediate termination. Conduent, as the client employer, failed to take appropriate corrective action to address the discriminatory decision made by Broadleaf, despite being aware of the situation.

Joint Employment and ADA Violations

This case not only sheds light on disability discrimination but also raises the issue of joint employment. In an economy where staffing agencies are increasingly utilized by companies to source workers for essential business functions, it becomes crucial for both client employers and staffing agencies to establish processes that allow workers with disabilities to request accommodations to perform their job's essential functions. The ADA mandates that employers engage with applicants and employees to provide reasonable accommodations for disabilities and prohibits adverse actions against qualified employees based on their disability. Client employers cannot simply hide behind staffing agencies as the employer-of-record to evade their obligations under the ADA.

The EEOC's Legal Action: The EEOC filed the lawsuit after attempting to reach a pre-litigation settlement through the conciliation process. EEOC Trial Attorneys Edumin Corrales and Anastasia Doherty led the litigation, with supervision from EEOC Assistant Regional Attorney Kimberly A. Cruz. By taking legal action, the EEOC aims to ensure that individuals with disabilities are protected from discrimination and that employers fulfill their responsibilities under the ADA.

Settlement Details

The settlement agreement consists of two consent decrees, providing a total payment of $120,000, including compensation for lost wages and other damages suffered by the employee. In addition to the monetary relief, the agreement includes significant non-monetary provisions designed to prevent further discrimination. These provisions encompass injunctive measures that prohibit both Broadleaf and Conduent from discriminating against employees and contingent workers based on disability. Moreover, the settlement requires updates to each company's internal policies to ensure compliance with federal anti-disability discrimination laws. Additionally, mandatory training for management employees about disability accommodation and discrimination laws is part of the settlement to foster awareness and prevent future violations.

Summing it Up

The settlement reached between Conduent and Broadleaf not only resolves the specific disability discrimination case but also highlights the importance of addressing joint employment issues in employment cases. Employers are not allowed to hide discriminatory actions through their use of a staffing company.

Read the EEOC’s Press Release

New York Votes to Prohibit Discrimination Based on Weight or Height

The New York City Council recently enacted legislation prohibiting employment discrimination premised on an individual's weight or height, signifying a critical advancement in the sphere of employment law. The law contains a provision granting an exception to employers for whom an employee's height or weight is intrinsically tied to the execution of vital job functions, as well as to operators or providers of public accommodations.

This legislation positions New York City alongside a select number of other cities that have already instituted prohibitions against weight-based discrimination, including Urbana, Illinois; Madison, Wisconsin; Binghamton, New York; San Francisco; Santa Cruz, California; and Washington, D.C. Moreover, the states of Michigan and Washington have passed similar laws, according to a study by Vanderbilt University.

This development signals a potential new direction in the ongoing battle against workplace discrimination, with an increasing focus on size discrimination. Recent data illuminates the pervasiveness of size discrimination, with a ResumeBuilder survey indicating that over a quarter of respondents reported experiencing weight discrimination in the workplace. This percentage increases dramatically to 53% and 71% when focusing on self-identified overweight and obese respondents, respectively.

Supplementing these findings, recent May data from the Society for Human Resource Management (SHRM) suggest that these experiences are not anomalous. According to SHRM, half of people managers reported a preference for interactions with "healthy weight" employees, while 11% acknowledged that obese individuals in their organizations are not treated equitably.

The impact of such bias extends beyond fostering a respectful and inclusive workplace environment; it may also significantly influence employee retention. A substantial 75% of workers who reported experiencing such discrimination indicated that it fostered a desire to leave their current employment.

The new law takes into account necessary allowances for height and weight considerations integral to the performance of essential job functions. It also does not prohibit employers from providing incentives that promote weight management within the framework of a voluntary wellness program. This balanced approach seeks to promote fairness while acknowledging the realities of certain job requirements.