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.
