When the Biden administration’s overtime rule was overturned in late 2024, it left many workers, including hundreds at The Ohio State University, facing a harsh reality: anticipated pay raises were rescinded. The controversial legal decision has reignited national conversations around labor laws, economic fairness, and the impact on workers in higher education and beyond.
Why Was Biden’s Overtime Rule Overturned?
The Biden administration’s rule sought to increase the salary threshold for overtime eligibility under the Fair Labor Standards Act (FLSA), raising it from $35,568 to $58,656 annually. This change would have expanded overtime pay eligibility to millions of American workers, ensuring fair compensation for hours worked beyond the standard 40-hour week.
However, on November 15, 2024, a federal judge in Texas ruled that the Department of Labor exceeded its authority with the new regulation. Employers nationwide had already begun adjusting their pay structures in anticipation of the changes, only to be caught off guard by the ruling, which effectively nullified months of planning.
Immediate Impact on Ohio State University Employees
Ohio State University had proactively raised the salaries of 306 employees to maintain their exempt status under the new rule. These increases were implemented on November 1, 2024, as part of the university’s compliance efforts. Just two weeks later, the court’s decision nullified the regulation, leading Ohio State to rescind the pay raises and revert affected employees to their previous salaries.
For many employees, this abrupt reversal felt like a betrayal. Workers who had adjusted their budgets to account for the pay raises now face financial uncertainty. The move has also sparked dissatisfaction and eroded trust between staff and university administrators.
The Broader Consequences of the Decision
For Employees
The rollback disproportionately affects workers in roles with salaries just below the proposed threshold. These employees not only miss out on pay raises but also lose the potential to earn overtime compensation for additional hours worked. For many, the decision exacerbates financial challenges, especially during a period of rising living costs.
For Employers
Employers who had adjusted salaries or reclassified positions to comply with the rule now find themselves in a difficult position. Reversing salary increases, as Ohio State did, risks damaging employee morale and retention. Others may choose to maintain the changes to avoid backlash but incur unplanned expenses, which could strain budgets.
State-Level Responses and Alternatives
While the federal rule has been struck down, some states have enacted their own overtime protections. States like California and New York, for example, maintain higher salary thresholds for overtime eligibility. These state-level regulations provide a safety net for workers but also create a fragmented regulatory landscape, complicating compliance for employers operating in multiple states.
The Path Forward for Overtime Regulations
The federal ruling late in the Biden administration leaves the salary threshold at a lower level. While the Biden administration could appeal the ruling, the incoming Trump administration could abandon any appeal and let the ruling stand. Advocacy groups and labor unions are likely to continue pushing for stronger worker protections both at the state and federal levels, keeping the issue in the spotlight.
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