Tag: Overtime

  • 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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  • Federal Judge Vacates Overtime Final Rule

    Federal Judge Vacates Overtime Final Rule

    by CUPA-HR | November 15, 2024

    On November 15, a federal judge in the Eastern District Court of Texas ruled to strike down the Biden administration’s Fair Labor Standards Act (FLSA) overtime final rule. The ruling strikes down all components of the rule, meaning both the July and January salary thresholds are no longer in effect, and the triennial automatic updates will not take place. The decision applies to all covered employers and employees under the FLSA nationwide.

    The Eastern District Court of Texas held a hearing on the business groups’ lawsuits challenging the overtime regulations on November 8. During the hearing, the judge suggested that it would be problematic if DOL’s salary basis replaced the duties test established under the FLSA regulations. He also noted that the Biden administration’s regulations were projected to have a larger number of workers impacted by the salary threshold increase than the Trump administration’s 2019 rule. The judge did not rule from the bench, but his remarks showed skepticism about the Biden administration’s rule.

    Background

    As a reminder, the final rule implemented a two-phase approach to increasing the minimum salary threshold under the FLSA overtime regulations. 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). The second increase was set to take effect on January 1, 2025, and it would have increased the minimum salary threshold again to $1,128 per week ($58,656 per year). The final rule also adopted automatic updates to the minimum salary threshold that would occur every three years.

    Soon after the final rule was published, several lawsuits were filed challenging the final rule. The suit claimed that the salary threshold that was supposed to go into effect on January 1, 2025, was so high it would 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 violated both the statutory language of the FLSA and prior court decisions. The suits also challenged the automatic updates. The Eastern District Court of Texas granted a preliminary injunction for public employers in Texas prior to the July 1 effective date, stopping the rule from taking effect for those employers only. For private employers in Texas and all other employers in the country, the rule went into effect on July 1, and the January 1 effective date was still in play.

    Looking Ahead

    With the decision, the salary threshold set in the 2019 regulations ($35,568 per year or $683 per week) will be the salary threshold employers should adhere to. Whether President-elect Trump decides to increase the minimum salary threshold during his second term remains to be seen, but there will be no effort from his incoming administration to appeal the decision in favor of the Biden administration’s threshold. CUPA-HR will continue to keep members apprised of any updates related to the FLSA overtime regulations.



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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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