Federal Judge Blocks Biden Administration’s Overtime Pay Expansion Rule

Last Friday, U.S. District Judge Sean D. Jordan of the United States District Court, Eastern District of Texas, issued a permanent injunction against a Biden administration overtime pay rule aimed at expanding eligibility to millions of salaried workers, halting the implementation of a rule that could have significantly impacted the home care industry and its workforce. The full decision may be read by clicking here.

The Department of Labor’s (DOL) rule sought to increase the salary threshold for overtime pay from $35,568 to $43,888 in 2024, with a further rise to $58,656 in 2025. If implemented, the regulation would have extended overtime pay benefits to an estimated 4 million workers and an additional 292,900 higher-compensated employees. However, Judge Jordan ruled that DOL exceeded its authority by focusing on wage levels rather than job duties when determining overtime eligibility.

Implications for the Home Care Industry

For the home care industry, this decision preserves the status quo, allowing agencies to maintain existing payroll structures without the immediate need to adjust to higher salary thresholds for overtime pay. While the blocked rule temporarily alleviates financial pressure, it highlights broader challenges faced by the industry:
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1. Impact on Supervisory and Administrative Roles:
Many home care agencies employ salaried staff in roles such as care coordinators, schedulers, and supervisors who might have been affected by the new thresholds. Had the rule been implemented, agencies would either need to increase salaries to meet the new thresholds or reclassify these employees as hourly workers, leading to increased costs and administrative complexity.

2. Workforce Retention and Financial Stability:
Home care agencies already operate on tight budgets, with margins further constrained by rising operational costs and workforce shortages. A sudden increase in labor costs could force agencies to make difficult decisions, such as scaling back services or increasing client fees—actions that could affect accessibility and affordability of care for families.

3. Ripple Effect on Direct Care Workforce:
Though the rule targeted salaried employees, its financial implications could indirectly impact direct care workers. Agencies with strained budgets might face challenges in providing wage increases or bonuses for caregivers, potentially exacerbating workforce retention issues in an already competitive labor market.

Advocacy and Support for Members

HCAOA continues to advocate for regulatory balance that supports home care agencies’ ability to provide affordable, quality care while ensuring fair compensation for workers. This court decision underscores the importance of a thoughtful approach to labor policies that takes into account the unique financial and operational realities of the home care industry.

HCAOA members are encouraged to monitor developments related to overtime pay regulations and evaluate their current pay structures for compliance with existing rules. The association will provide updates on this issue and any potential appeals or new regulatory actions from the Department of Labor.