Tag: decision

  • DOL files fresh appeal of a Texas decision vacating its new overtime rule

    DOL files fresh appeal of a Texas decision vacating its new overtime rule

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    Dive Brief:

    • The U.S. Department of Labor has appealed a Texas federal judge’s 2024 decision blocking its Biden-era final rule which sought to expand overtime pay protections under the Fair Labor Standards Act, according to a Feb. 28 court filing.
    • Last December, Judge Sam Cummings of the U.S. District Court for the Northern District of Texas ruled against DOL in Flint Avenue, LLC v. U.S. Department of Labor, vacating and setting aside the final rule. Cummings’ decision came just over one month after another Texas judge similarly vacated and set aside the rule in a separate lawsuit filed by the state of Texas and parties including the Plano Chamber of Commerce.
    • The appeal takes Flint Avenue to the 5th U.S. Circuit Court of Appeals, the same court in which DOL filed an appeal of the decision in the State of Texas case last year. DOL’s public affairs staff did not immediately respond to a request for comment. The U.S. Department of Justice, which represents the DOL, did not respond to a request for comment submitted via its online form.

    Dive Insight:

    The Feb. 28 notice of appeal may come as a surprise to employers who expected the Trump administration to abandon the final rule; attorneys who previously spoke to HR Dive said that the rule was effectively “dead” despite DOL’s State of Texas appeal because of the Trump administration’s conservative policy stance on overtime.

    In fact, the new administration had already filed motions in the 5th Circuit pertinent to overtime rule litigation. On Jan. 22, two days after President Donald Trump’s inauguration, DOJ attorneys sent a letter to the 5th Circuit requesting a 30-day extension on the deadline set by the court to file an opening brief in the State of Texas appeal. The court granted the request and the agency’s filing deadline is currently set to March 7.

    The April 2024 final rule proposed a two-step process that would have eventually raised the minimum annual salary threshold for overtime pay eligibility under the FLSA from $35,568 to $58,656 by Jan. 1, 2025. The rule would then have implemented a mechanism for automatically adjusting the threshold every three years using current wage data beginning in July 2027.

    But a series of Texas court decisions froze the rule. The judge in State of Texas held that the rule exceeded DOL’s authority and was unlawful. Likewise, Cummings said in his decision that he found the State of Texas judge’s reasoning “persuasive,” and he adopted the same reasoning in ruling for the plaintiffs.

    There is some intrigue in how the 5th Circuit might rule on the two appealed judgments given that the court signed off on DOL’s overall use of a salary basis test for determining overtime pay eligibility in last year’s Mayfield v. U.S. Department of Labor. The Mayfield plaintiffs alleged that the salary basis test had no basis in the FLSA’s text, but the 5th Circuit disagreed. The court did hold, however, that DOL “cannot enact rules that replace or swallow the meaning” of the FLSA’s text, adding that particular salary threshold may raise legal issues because of their size.

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  • SCOTUS decision safeguards schools’ E-rate discounts

    SCOTUS decision safeguards schools’ E-rate discounts

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    The U.S. Supreme Court on Friday unanimously ruled that reimbursement requests filed with the federal E-rate program, which subsidizes internet access for schools and libraries, qualify as claims under the False Claims Act, allowing a whistleblower suit to proceed against a telecommunications company.

    Whistleblower Todd Heath alleged in 2008 that telecommunications provider Wisconsin Bell overcharged schools and libraries by not offering them discounted rates required under the E-rate program and submitting reimbursement requests for higher amounts than E-rate should have paid. The False Claims Act allows civilians to bring lawsuits against companies on behalf of the government when federal money is at stake.

    E-rate is administered by the Universal Service Administrative Co. under the direction of the Federal Communications Commission. Wisconsin Bell argued that because the Universal Service Administrative Co. is a private, nonprofit corporation and program money comes from fees collected by service providers, its reimbursement requests didn’t qualify as claims under the False Claims Act.

    Under that law, a request for money qualifies as a claim if the government “provides or has provided any portion of the money or property requested or demanded.” Justice Elena Kagan, writing for the court, rejected Wisconsin Bell’s arguments because the government provided part of the funds that schools and libraries applied for.

    “In the years in which those requests were made, the Government transferred more than $100 million from the Treasury into the pool of funds used to pay E-Rate subsidies,” Kagan wrote. “That is enough to create a ‘claim’ under the Act, and to allow a suit alleging fraud to go forward.”

    Wisconsin Bell’s argument that the $100 million was entirely from fees collected by carriers also overlooked the government’s role in delivering that money to the program, Kagan wrote, stating that the government was not a “passive throughway” for those funds.

    The Supreme Court sent Wisconsin Bell, Inc. v. United States, ex rel. Todd Heath back to the 7th U.S. Circuit Court of Appeals for its whistleblower claims to proceed.

    The Schools, Health and Libraries Broadband Coalition hailed the ruling as helping to strengthen enforcement measures and safeguard broadband funding.

    “This decision is a win for schools and libraries who rely on the E-rate program for essential broadband services,” said John Windhausen, the coalition’s executive director, in a statement. “By clarifying the applicability of the False Claims Act to E-rate reimbursements, the Court helps ensure that schools and libraries are able to obtain prices that are no higher than the rates charged to similarly situated customers. This ruling helps improve the efficiency of the Universal Service Fund and the E-Rate program.”

    Attorney Allyson Ho, who represented Wisconsin Bell in the case, did not immediately respond to a request for comment.

    The narrow scope of the ruling, however, makes it difficult to forecast how the justices might rule on another pending E-rate matter this term. In a case consolidated from two pre-existing ones — FCC v. Consumers’ Research and Schools, Health and Libraries Broadband Coalition v. Consumers’ Research — the program’s future could be decided as the court determines the constitutionality of the funding mechanism for the FCC’s Universal Service Fund, which is overseen by USAC.

    “The court was very clear in its emphasis that it has no opinion on issues regarding the constitutionality of the universal fund and of USAC’s role that it will decide in that upcoming Consumers case,” said Noelle Ellerson Ng, associate executive director of advocacy and governance for AASA, The School Superintendents Association. 

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