HR Compliance

Court: DOL's FLSA Overtime Regulations Invalid

By

Zachary Gregory

| Sep 15, 2017

In case you missed it, on August 31, 2017, Judge Amos Mazzant of the Eastern District of Texas determined that the 2016 Final Rule issued by the U.S. Department of Labor, which increased the minimum salary threshold to $47,476, was not a valid action by the agency.

After finding that the case was ready for judicial decision and the parties at hand could be injured if the court did not intervene, Mazzant addressed all three of the plaintiff’s arguments.

First, the court addressed the state plaintiff’s argument that the Fair Labor Standards Act’s (FLSA) overtime requirements violate the Constitution by regulating the states and coercing them to adopt wage policy choices that adversely affect state budgets. The court held the Supreme Court precedent of Garcia v. Metropolitan Transit Authority established that Congress has the authority under the Commerce Clause to impose FLSA’s minimum wage and overtime requirements on state and local employees.

Next, the court declined to accept the plaintiff’s argument that based on the clear statement rule, the FLSA does not apply to the states. Under that rule, “if Congress intended to alter the ‘usual constitutional balance between the states and the federal government,’ it must make its intention to do so ‘unmistakably clear in the language of the statute.”

The court discarded this argument simply by pointing out the law is applicable to any “enterprise engaged in commerce or in the production of goods for commerce,” and this phrase, by statutory definition, includes the activity of any public agency. Therefore, the court held that the Congress was clear enough in its intention to impact the states.

 Failing the Test

Finally, and most importantly, the court agreed with the plaintiffs in finding that the Department of Labor acted outside of the scope of its delegated authority by implementing a salary-level test that effectively eliminated the duties test.

The court adhered to the test established in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., which requires courts to determine whether Congress has spoken directly to the precise question at issue. If Congress has, then the court and agency must follow the intent of Congress.

After interpreting the plain meanings of “executive, administrative and professional,” Mazzant found Congress intended the exemption to apply to employees who perform those duties, rather than those who simply are paid a certain amount. Furthermore, because the new regulations focused more on the salary level than Congress intended, they were found invalid, and the court held the agency acted outside of its delegated authority.

What’s Next?

The Department of Labor published a Request for Information in the July 26 Federal Register, which indicates the agency intends to continue its attempt at overhauling overtime.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

About the Author

Zachary Gregory

As a compliance attorney for Paycom, Zach Gregory monitors legal and regulatory changes at the state and federal levels, focusing on payroll and garnishment laws, to ensure the Paycom system is updated accordingly. He previously worked at a law firm as a tax attorney. He holds a bachelor’s degree from Oklahoma Christian University and a J.D. from Oklahoma City University. Outside of work, Gregory enjoys playing in the backyard with his two boys, and finding new restaurants with his wife and high school sweetheart, Kellyn.

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