DOL to Challenge Order Invalidating Obama Administration’s Controversial 2016 Overtime Rule
On October 30, 2017, the Department of Labor (“DOL”) alerted Texas U.S. District Judge Amos Mazzant that it planned to challenge his August 31, 2017 order invalidating the Obama administration’s controversial 2016 overtime rule. The rule would have significantly expanded the number of executive, administrative and professional (“EAP”) workers eligible for overtime under the Fair Labor Standards Act (“FLSA”) by doubling the minimum salary required to qualify for overtime exemption from $23,660, to roughly $47,000 annually. It also would have raised the overtime eligibility threshold for highly compensated workers from $100,000 to around $134,000, and provided an index for future increases.
However, Judge Mazzant struck down the final rule on summary judgment, holding that its salary level exceeded the DOL’s authority. In an eighteen-page opinion, he reasoned that Congress required that the DOL look to EAP workers’ job duties—not just their salaries—in determining which of them met the EAP overtime exemption. If allowed to go into effect, he explained, the new rule’s significantly higher salary threshold would essentially eliminate the “duties test” and replace it with a salary test. Thus, he concluded that the final rule was invalid.
Since filing its notice of appeal to challenge Judge Mazzant’s decision, the DOL has issued a release stating it would ask the Fifth Circuit Court of Appeals to stay the case. “Once this appeal is docketed, the Department of Justice will file a motion with the Fifth Circuit to hold the appeal in abeyance while the Department of Labor undertakes further rulemaking to determine what the salary level should be.” It seems likely that the DOL took this step as part of a strategy to protect its authority to set a salary threshold for overtime that the Trump administration will accept. Alex Acosta, Labor Secretary, previously indicated that the Trump administration DOL would seek to revise the rule’s salary threshold. He suggested that the DOL would set the salary level between the one the Obama administration proposed and the Bush administration’s $23,660 threshold.
It’s possible that the DOL’s strategy could boomerang. The Fifth Circuit could refuse to grant its request for a stay, denying it time to determine a new salary level. If the Fifth Circuit affirms Judge Mazzant’s decision, it could comment on the scope of the DOL’s authority, narrowing it in a way Judge Mazzant’s decision did not. On the other hand, the Fifth Circuit could overturn Judge Mazzant’s decision and uphold the Obama administration’s rule. If so, it could be difficult for the Trump administration DOL to lower the salary threshold later.
For updates about the appeal and DOL’s proposed rulemaking to determine the salary level, continue to check in with WISE.