© 2017 The Texas Lawbook.
By Jon Mark Hogg of Jackson Walker
(Sept. 6) – The proposed update to the overtime exemptions rule under the Fair Labor Standards Act was finally put out of its misery Thursday by Judge Amos Mazzant of the Eastern District of Texas.
The proposed rule also provided a formula for required increases in the amount of the minimum salary to take place every three years. No changes to the duties test to qualify for the exemptions were proposed.
The Plano Chamber of Commerce, along with numerous other business groups and states, sued the Department of Labor last year to halt the implementation of the rule which was set to take effect December 2016. Judge Mazzant granted a request for a temporary injunction stopping the agency from enforcing the rule last November.
The rationale for the injunction was that the Department exceeded its authority in raising the salary so high that it rendered the exemptions themselves meaningless. But Judge Mazzant went further. He stated that the plain language of the FLSA did not show that Congress ever intended that these white collar exemptions from overtime be dependent on a minimum salary requirement.
In the waning days of the Obama administration, the department appealed that decision, but the case was not decided before the inauguration of President Donald Trump. After the Trump administration took over, the new Secretary of Labor Alex Acosta announced that the Department was not going to implement the rule and would revisit the matter. As a result, the agency’s enthusiasm to pursue the appeal waned.
With all that was transpiring, the plaintiffs asked Judge Mazzant to make the injunction permanent. He granted this request on Aug. 31, again stating that the FLSA did not grant the department the authority to enact a minimum salary in order to qualify for the exemption. At the same time, he also denied the request of the AFL-CIO to intervene because the department was no longer adequately seeking to uphold the rule.
The department had previously filed a brief in the Fifth Circuit Court of Appeals stating that it no longer sought to implement the rule, but it did want the court to overturn that part of the ruling that says the Secretary of Labor has no authority to create a minimum salary requirement for the exemption. This appeal is set to be argued at the Fifth Circuit on October 3.
Now that the temporary injunction is permanent, it appears that the department will let that order stand but will likely continue to appeal the question of whether it has authority to create and apply a minimum salary test for the exemptions. This puts the agency in the unenviable position of appealing a decision which does exactly what the new administration wants.
While the judge’s ruling did not actually go so far as to say the department could not impose a salary test at all, the department seems to interpret it that way, or at least as potentially opening up a potential challenge to whether any of the prior or future salary tests are lawful.
What the court actually held, though, was only that the department cannot create a minimum salary so high as to essentially eliminate the duties test or make duties irrelevant. In other words, the department cannot create a test that essentially looks to salary alone as the measure of who qualifies for the exemption.
While the procedural posture of the case has changed, its substance remains the same for the time being—the increased salary requirement is no more. Judge Mazzant also killed the provision of the rule that would implement automatic increases every three years to adjust for inflation.
We will have to wait and see what happens with the Department of Labor’s reconsideration of a new revised rule, or if one is ever proposed. But there is little doubt that department will continue the appeal whether it has the authority to use a minimum salary requirement at all. The AFL-CIO could also appeal the denial of their request to intervene. The rule as it existed may be dead, but the issue and the case look like they are far from over.
Jon Mark Hogg is a seasoned litigator with experience across the spectrum of legal issues you will face as an individual — real estate, probate family disputes, landlord-tenant, consumer issues, dealing with local government — and with your company — civil rights and employment law, commercial and contract disputes, and injury and tort cases. Jon Mark is Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization.
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