Tag: Court

  • U.S. Appeals Court Overturns $15 Minimum Wage for Federal Contractors

    U.S. Appeals Court Overturns $15 Minimum Wage for Federal Contractors

    by CUPA-HR | November 12, 2024

    On November 5, the 9th U.S. Circuit Court of Appeals reversed a lower district court’s decision to dismiss a lawsuit challenging the Biden administration’s executive order and the Department of Labor (DOL)’s final rule to increase the minimum wage for federal contractors. The ruling orders the legal challenge to proceed, which could ultimately strike down the executive order and final rule.

    In April 2021, the Biden administration published executive order 14026, which directed DOL to issue regulations to increase the minimum wage for federal contractors to $15 per hour beginning on January 30, 2022. Subsequently, in November 2021, DOL issued its final rule to implement the executive order, setting the minimum wage for federal contractors to $15 per hour on January 30, 2022, and requiring the secretary of Labor to annually review and determine the minimum wage amount beginning in January 2023.

    The executive order and final rule were challenged by five states: Arizona, Idaho, Indiana, Nebraska and South Carolina. In their suit, the states claimed that the Biden administration violated the Federal Property and Administrative Services Act (FPASA) and exceeded its authority granted under the law by imposing a wage mandate through an executive order. They also argued that DOL violated the Administrative Procedure Act (APA), which governs how federal agencies proceed through the notice-and-comment rulemaking process, when implementing the final rule. The lawsuit was originally dismissed by a federal judge in the U.S. District Court of Arizona, leading the states to appeal to the 9th Circuit.

    In the 9th Circuit’s ruling, two of the three judges on the panel sided with the states’ arguments, reversing the dismissal of the case from the lower district court. The majority opinion held that the minimum wage mandate exceeded the president’s authority under FPASA and that DOL’s final rule was subject to arbitrary-or-capricious review under the APA. As such, the circuit court sends the case back to the district court, where the federal judge will proceed with the case and issue a further ruling to uphold or strike down the executive order and final rule. For now, the order and final rule are still in place, but the future of both is uncertain. CUPA-HR will keep members apprised of any updates related to this lawsuit and further laws and regulations impacting federal contractors.

     

     



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  • Appeals Court Upholds DOL’s Authority to Use Minimum Salary Threshold to Determine Overtime Exemptions

    Appeals Court Upholds DOL’s Authority to Use Minimum Salary Threshold to Determine Overtime Exemptions

    by CUPA-HR | September 12, 2024

    On September 11, the 5th U.S. Circuit Court of Appeals issued a ruling in Mayfield v. U.S. Department of Labor that upholds DOL’s authority to implement a minimum salary threshold to determine exempt status under the Fair Labor Standards Act (FLSA) overtime pay requirements. While the ruling does not answer how other lawsuits challenging the Biden administration’s rule will be decided, the ruling is significant and could help other federal judges determine whether or not to strike down the Biden administration’s increased minimum salary thresholds.

    Background

    The case’s plaintiff, Robert Mayfield, filed a lawsuit against the Trump administration’s overtime rule in August 2022. In his lawsuit, he argued that the FLSA language on overtime exemptions only mentions a worker’s job-related duties and that implementing a salary threshold to determine exempt status exceeds DOL’s statutory authority. The Western District Court of Texas, a lower court where the lawsuit was originally filed, sided with DOL, stating that the agency has the statutory authority to implement the FLSA overtime minimum salary threshold. Mayfield appealed the decision to the 5th Circuit soon after.

    The Decision

    In its decision that sides with the Department of Labor, the 5th Circuit Court held that DOL may use a minimum salary requirement as part of its test for determining whether or not an employee qualifies as an executive, administrative and professional (EAP) employee exempt from the FLSA overtime pay requirements. Notably, the 5th Circuit Court argued that DOL does have statutory authority under the FLSA to use a salary threshold to “define and delimit the terms of exemption.”

    Though the decision allows for DOL to use a minimum salary threshold, the 5th Circuit Court did state that there is a limit to the power granted to DOL to do so. Specifically, the decision states that DOL may only use the minimum salary requirement to the extent that the salary threshold established in the regulations is a reasonable proxy for who is and who is not an EAP employee. They argued that DOL’s power to rely on proxy is not “unbounded” and that the agency “cannot enact rules that replace or swallow the meaning” of the FLSA’s terms that they seek to define.

    Looking Ahead

    Outside of the Mayfield case, there are three pending lawsuits in the Eastern District Court of Texas to challenge the Biden administration’s overtime final rule. That rule implements a two-phase approach to increasing the minimum salary threshold under the FLSA. The first increase took effect on July 1, increasing the minimum salary threshold from the current level of $684 per week ($35,568 per year) to $844 per week ($43,888 per year), and the second increase is set to take effect on January 1, 2025, increasing the minimum salary threshold again to $1,128 per week ($58,656 per year).

    The decision from the 5th Circuit does not have an immediate impact on the lawsuits challenging the Biden administration’s overtime rule, nor does it provide a definitive answer on how lower courts decide in those legal challenges. As such, the Biden administration’s July 1 salary threshold continues to be in effect,* and the second increase to the salary threshold is still set to take effect on January 1, 2025. CUPA-HR will keep members apprised of additional updates related to the FLSA overtime pay regulations.


    *A preliminary injunction to block DOL from enforcing the overtime final rule was placed for public employees in the state of Texas. Private institutions in Texas and all other institutions outside of Texas need to be in compliance with the July 1 salary threshold.



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  • Supreme Court Rejects Biden Administration’s Request for Relief in Title IX Legal Challenges – CUPA-HR

    Supreme Court Rejects Biden Administration’s Request for Relief in Title IX Legal Challenges – CUPA-HR

    by CUPA-HR | August 19, 2024

    On August 16, the U.S. Supreme Court ruled against the Biden administration’s request to partially overturn preliminary injunctions from lower courts that block the Department of Education from enforcing the administration’s April 2024 Title IX final rule. The decision leaves the preliminary injunctions from the lower district courts in place, preventing the new Title IX rule from taking effect in 26 states and hundreds of schools in other states.

    Background

    Shortly after the Biden administration’s Title IX final rule was published, over two dozen states and advocacy groups filed lawsuits challenging the rule. Over the course of the summer, decisions from lower district courts across the country placed preliminary injunctions on the final rule, leading to the blocking of the final rule in 26 states, as well as at hundreds of schools where members of the Young America’s Foundation, Female Athletes United and Moms for Liberty are in attendance.*

    After several preliminary injunctions were issued, the Biden administration appealed to the Supreme Court with an emergency request asking the court to limit the scope of the preliminary injunctions placed by the lower courts. Specifically, the Biden administration asked the Supreme Court to limit the scope of the preliminary injunctions to only block provisions of the Title IX final rule related to gender identity, arguing that the lower courts’ decisions to grant the preliminary injunctions were based on concerns with the expanded protections for transgender students. The Biden administration had hoped that by limiting the scope of the preliminary injunctions, other provisions like the new grievance procedures and training requirements would be able to take effect on August 1.

    Supreme Court’s Decision

    In a 5-4 decision, the Supreme Court rejected the Biden administration’s plea to limit the scope of the preliminary injunctions, leaving in place the lower courts’ rulings. The majority opinion stated that the Biden administration did not provide a strong enough argument to sway the Supreme Court to overturn the lower courts’ decisions, and they argued that the gender identity provisions the Biden administration had hoped to limit the scope of the preliminary injunctions to were “intertwined with and affect other provisions of the rule.”

    Looking Ahead

    With the Supreme Court’s decision, the preliminary injunctions from the lower courts are still in place. Further decisions from the district courts on the legality of the final rule are still pending. The Title IX rule could return to the Supreme Court in the future, however, depending on how lower courts rule on the legality of the final rule and whether those decisions are appealed.

    CUPA-HR will keep members apprised of any updates on the legal challenges against the Biden administration’s Title IX rule.


    *The 26 states where the rule is blocked from being enforced by the Department of Education are Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming. The final rule is also blocked from taking effect at hundreds of colleges and universities across the country, including in states that did not challenge the Title IX final rule. A list of those schools can be found here.



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  • Overtime Rule Challenged in Federal Court – CUPA-HR

    Overtime Rule Challenged in Federal Court – CUPA-HR

    by CUPA-HR | May 23, 2024

    On May 23, a group of 13 local and national associations and Texas businesses filed suit in federal court in Texas, challenging the U.S. Department of Labor’s rule setting new minimum salary thresholds for the white collar overtime pay exemptions under the Fair Labor Standards Act (FLSA).

    The final rule of April 23, 2024 increases the minimum salary threshold to $43,888 on July 1, 2024, and then to $58,656 on January 1, 2025. The rule also implements automatic updates to the threshold that will occur every three years. The suit claims that the salary threshold that goes into effect on January 1, 2025, is so high it will result in more than 4 million individuals being denied exempt status, even though these individuals could be reasonably classified as exempt based on their duties, and in doing so, the rule violates both the statutory language of the FLSA and prior court decisions. The suit also challenges the automatic updates.

    The following are plaintiffs in the case: Plano Chamber of Commerce, American Hotel and Lodging Association, Associated Builders and Contractors, International Franchise Association, National Association of Convenience Stores, National Association of Home Builders, National Association of Wholesaler-Distributors, National Federation of Independent Business, National Retail Federation, Restaurant Law Center, Texas Restaurant Association, Cooper General Contractors and Dase Blinds.

    CUPA-HR will be following the case closely and provide you with regular updates.



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  • District Court Invalidates NLRB’s Joint-Employer Rule – CUPA-HR

    District Court Invalidates NLRB’s Joint-Employer Rule – CUPA-HR

    by CUPA-HR | March 13, 2024

    On March 8, 2024, the U.S. District Court for the Eastern District of Texas invalidated the National Labor Relations Board’s joint-employer final rule, meaning the rule did not go into effect on March 11, as was anticipated. The NLRB will likely appeal the ruling to the 5th U.S. Circuit Court of Appeals.

    The final rule expanded the joint-employer standard under the National Labor Relations Act, which is used to determine when two or more entities are jointly responsible for setting the terms and conditions of employment over a shared group of employees. Joint-employer status comes with significant responsibilities and liabilities under the law, including bargaining with any union representing the shared employees and being liable for any NLRA violations either employer commits against those employees.

    Traditionally, joint-employer status was only triggered if the potential joint employer exercised direct and immediate control over the shared workers’ terms and conditions of employment, including hiring, firing, disciplining, supervising, and directing the employees. The final rule, however, would have expanded joint-employer status to entities that have indirect or unexercised, reserved control over the terms and conditions of employment.

    The decision from the district court invalidates the ruling, halting implementation and reinstating the traditional joint-employer standard. As the judge in the case explained, the rule was too broad and violated the NLRA. Specifically, the judge stated it “would treat virtually every entity that contracts for labor as a joint employer because virtually every contract for third-party labor has terms that impact, at least indirectly … essential terms and conditions of employment.”

    Details of the appeal and subsequent decision from the the 5th U.S. Circuit Court of Appeals will be shared in the coming months. If the NLRB wins on appeal and the rule is eventually implemented, it will apply to private-sector higher education institutions. It will impact colleges’ and universities’ relationships with many of their contractors whose employees perform work on campus, including food service, security and landscaping services.

    CUPA-HR will continue to keep members apprised of updates regarding the status of the NLRB’s joint-employer rule.



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  • Supreme Court Rules Against Affirmative Action – CUPA-HR

    Supreme Court Rules Against Affirmative Action – CUPA-HR

    by CUPA-HR | June 29, 2023

    This morning, the Supreme Court issued rulings for the cases Students for Fair Admissions v. Harvard and Students for Fair Admissions v. University of North Carolina (UNC), both of which concerned the use of race-based affirmative action in admissions decisions at colleges and universities. The court ruled in favor of Students for Fair Admissions, ultimately striking down the practice of race-conscious admissions decisions on campus.

    The Decision

    In a 6-3 decision written by Chief Justice John Roberts, the court held that Harvard’s and UNC’s admissions programs violate the equal protection clause of the Fourteenth Amendment. To summarize his arguments, Roberts noted that using a racial classification is only constitutionally permissible if doing furthers a “compelling governmental interest” and is “‘narrowly tai­lored’— meaning ‘necessary’— to achieve that interest.” He added that while “remediating specific, identified instances of past discrimination” can constitute a compelling interest that justifies race-based state action, “ameliorating societal discrimination does not.” Roberts continued by stating that “[u]niversity pro­grams must comply with strict scrutiny …  may never use race as a stereotype or negative, and — at some point — they must end.” He finished by stating the “respondents’ admissions systems — however well intentioned and implemented in good faith — fail each of these criteria [and] therefore [are invalid] under the Equal Protection Clause of the Fourteenth Amend­ment.”

    As an initial matter, Roberts noted that for universities to operate a “race-based admissions programs in a manner that” satisfies constitutional muster, it must be “‘sufficiently measurable to permit judicial [review].’” He found both universities failed to do so, stating:

    “Harvard identifies the following educational benefits that it is pursuing: (1) ‘training future leaders in the public and private sectors’; (2) preparing graduates to ‘adapt to an increasingly pluralistic society’; (3) ‘better educating its students through diversity’; and (4) ‘producing new knowledge stemming from diverse outlooks.’ (…) UNC points to similar benefits, namely, ‘(1) promoting the robust exchange of ideas; (2) broadening and refining understanding; (3) fostering innovation and problem-solving; (4) preparing engaged and productive citizens and leaders; [and] (5) enhancing appreciation, respect, and empathy, cross-racial understanding, and breaking down stereotypes.’ (…) Although these are commendable goals … it is unclear how courts are supposed to measure any of [them].”

    Secondarily, Roberts found the “respondents’ admissions programs fail to articulate a meaningful connection between the means they employ and the goals they pursue,” as well as “how assigning students to (…) racial categories and making admissions decisions based on them furthers the educational benefits that the universities claim to pursue.” Roberts states that “[r]acial classifications are simply too pernicious to permit any but the most exact connection between justification and classification.” On this point, Roberts concluded that the “categories [used by the universities] are themselves imprecise in many ways” and that institutions “would apparently prefer a class with 15% of students from Mexico over a class with 10% of students from several Latin American countries, simply because the former contains more Hispanic students than the latter.”

    Additionally, Roberts states that “race may never be used as a ‘negative’ and that it may not operate as a stereotype,” and he argues the universities’ admissions policies failed because they did both. With respect to the first item, Roberts said “the District Court observed that Harvard’s ‘policy of considering applicants’ race (…) overall results in fewer Asian American and white students being admitted.’” With respect to the stereotypes, he found the policies at issue allocated preference to those “who may have little in common with one another but the color of their skin [and that t]he entire point of the Equal Protection Clause is that treating someone differently because of their skin color is not like treating them differently because they are from a city or from a suburb, or because they play the violin poorly or well.”

    Finally, Roberts found that “admissions programs also lack a ‘logical end point,’ which the majority found was needed under the court’s jurisprudence.

    The chief justice closed his opinion by stating that colleges and universities are not prohibited from considering an applicant’s “discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise,” but institutions are banned from establishing admissions programs and practices that explicitly consider race. The opinion elaborates, “A benefit to a student who overcame racial discrimination, for example, must be tied to that student’s courage and determination. Or a benefit to a student whose heritage or culture motivated him or her to assume a leadership role or attain a particular goal must be tied to that student’s unique ability to contribute to the university. In other words, the student must be treated based on his or her experiences as an individual — not on the basis of race.”

    Justices Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson issued a dissenting opinion in both cases (To note: Jackson did not take part in considering the decision in the Harvard case due to her previous connection with Harvard College). Sotomayor wrote in the dissenting opinion that the court’s decision “rolls back decades of precedent and momentous progress” and that it “holds that race can no longer be used in a limited way in college admissions to achieve such critical benefits,” which “cements a superficial rule of colorblindness as a constitutional principle in an endemically segregated society where race has always mattered and continues to matter.”

    In August 2022, CUPA-HR joined the American Council on Education and others in filing an amicus brief in support of Harvard and UNC. The brief argued that the Supreme Court should rule in favor of preserving race-conscious affirmative action, as has been made precedent for decades. The brief highlights the value of considering race and ethnicity during the admissions process and the broader impact such initiatives have for institutions’ efforts to increase diversity on campus.

    The Decision

    Prior to the rule’s issuance, stakeholders also raised concerns with the impact the decision could have on employers’ hiring and employment decisions as well as any diversity, equity and inclusion (DEI) programs or initiatives. Today’s decision to strike down race-based affirmative action in admissions practices could leave employers open to future legal challenges against their hiring decisions and other diversity programs.

    CUPA-HR strongly supports the need to create and sustain diverse, inclusive college and university communities. We’re disappointed that the Supreme Court’s action has limited our efforts. CUPA-HR’s government relations team is further analyzing the decision and will keep members apprised of any additional updates as it relates to these cases.



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  • Supreme Court: Highly Compensated Employee Entitled to Overtime Because Employer Did Not Pay on a Salary Basis – CUPA-HR

    Supreme Court: Highly Compensated Employee Entitled to Overtime Because Employer Did Not Pay on a Salary Basis – CUPA-HR

    by CUPA-HR | February 23, 2023

    On February 22, the U.S. Supreme Court issued its decision in Helix Energy Solutions, Inc. v. Hewitt, finding that an employee making over $200,000 per year was entitled to overtime pay under the Fair Labor Standards Act (FLSA) because he was not paid on a salary basis. The case is a reminder that exempt status depends not only on how much the employee is paid, but also on how they are paid. Employers may want to be particularly careful when providing exempt employees — including part-time exempt employees — with different weekly pay based on hours worked.

    Under U.S. Department of Labor (DOL) regulations, an employee must meet the following three requirements to be considered an executive, administrative or professional employee exempt from the FLSA’s overtime pay mandates: (1) perform duties consistent with those exempt categories as set forth by the DOL, (2) be paid a minimum salary (currently set at $684 per week), and (3) be paid on a salary basis. The employer in the case argued that the employee was exempt because he was paid $963 per day, therefore making at least the minimum salary of $684 per week, and he met the duties test for an executive.

    The court found, however, that the employee was not paid on a salary basis as set forth in Section 541.602 of DOL regulations and was therefore not exempt. Section 541.602 requires exempt employees to receive the full pre-determined salary for any week in which they perform any work without regard to the number of days or hours worked. Specifically, the court said the employee “did not get a salary (of $963 or any other amount) because his weekly take-home pay could be as little as $963 or as much as $13,482, depending on how many days he worked.” The court did say, however, that daily-rate workers could qualify as paid on a salary basis if the pay met the conditions set out in DOL regulations §541.604(b).

    In a dissenting opinion, Justice Brett Kavanaugh contended that the salary threshold and salary basis test — both of which DOL created through regulations — may not be consistent with the FLSA itself. Specifically, Kavanaugh said:

    “The Act focuses on whether the employee performs executive duties, not how much an employee is paid or how an employee is paid. So it is questionable whether the Department’s regulations — which look not only at an employee’s duties but also at how much an employee is paid and how an employee is paid — will survive if and when the regulations are challenged as inconsistent with the Act. It is especially dubious for the regulations to focus on how an employee is paid (for example, by salary, wage, commission, or bonus) to determine whether the employee is a bona fide executive. An executive employee’s duties (and perhaps his total compensation) may be relevant to assessing whether the employee is a bona fide executive. But I am hard pressed to understand why it would matter for assessing executive status whether an employee is paid by salary, wage, commission, bonus, or some combination thereof.”

    Since the employer in this case failed to raise the challenge to the regulations properly, the issue was not considered before the court.  As such, it remains unclear how many justices agree with Kavanaugh and whether the majority of the court would overturn the DOL’s salary basis and threshold tests.

    CUPA-HR continues to monitor all updates relating to the FLSA and its implementing regulations and will keep members apprised of significant news with respect to the overtime issue.



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