Rebecca Rainey: The Fifth Circuit this week will consider the US Labor Department’s ability to set limits on exemptions to overtime pay requirements in a case that could derail the Biden administration’s latest efforts to expand time-and-a-half pay protections to millions more workers.
The dispute before the US Court of Appeals for the Fifth Circuit involves business owner Robert Mayfield’s appeal challenging a 2019 rule that limited an exemption to overtime pay requirements.
Under the Fair Labor Standards Act, workers who are salaried, have certain “executive, administrative, and professional” job duties, and make a certain amount of money each year aren’t required to receive overtime premium pay when they work more than 40 hours a week.
The Trump administration’s 2019 rule updated the salary piece of the “white collar” exemption so that workers earning less than roughly $36,000 a year would be automatically eligible for time-and-a-half pay.
But Mayfield has argued that the DOL shouldn’t be able to consider how much a worker makes at all when determining who is eligible for the overtime exemption because the corresponding FLSA provision is silent on earnings.
While the FLSA gives the labor secretary the authority to “define and delimit” the overtime exemption, Mayfield and his attorneys contend that language only gives the DOL the power to look at an employee’s job duties to determine if they are exempt from overtime pay requirements.
An adverse ruling against the Trump-era rule is likely to knee-cap the Biden administration’s new overtime rule finalized earlier this year, which also uses a salary-level test to determine who is exempt from overtime.
That rule, which is facing its own legal challenges from business groups, makes it so employees earning less than $58,656 annually are eligible for overtime pay, a change expected to impact 4 million workers. Both the Biden and Trump rules, while slightly different, largely use the same formula the agency has used to set the overtime exemption for decades.
The proceedings in the Fifth Circuit case also present an early test of how the appeals court will navigate the Supreme Court’s recent ruling in Loper Bright Enterprises v. Raimondo. That June 28 decision directed courts to use their own judgment when determining the validity of an agency regulation, reversing the decades-old Chevron doctrine, which had guided judges to defer to an agency’s reasonable interpretation of an ambiguous law.
Ahead of the arguments, the Fifth Circuit asked Mayfield and the DOL to weigh in on how the lawsuit should proceed in the wake of the high court’s ruling. Loper Bright’s new standard has already cast a shadow over the case, as a Texas federal court relied on the now defunct-Chevron deference when upholding the rule last year.
The Pacific Legal Foundation, which is representing Mayfield, said the Loper Bright ruling “affirms the ultimate point of this lawsuit,” that only the courts are permitted to define the bounds of an agency’s delegated authority.
“In short, Loper Bright is the death knell of the Department’s claim to an ungoverned power to impose and raise minimum salary rules as high as the Secretary deems fit,” PLF wrote in a July 15 brief.
But attorneys for the DOL contend the new Supreme Court precedent bolsters their argument that the rule is a permissible reading of the FLSA because the agency has used a salary-level test as part of its criteria for the exemption since the FLSA became law in 1938.
“The Court explained that even in the absence of such an express delegation, respect for the agency’s interpretation is ‘especially warranted when’ it ‘was issued roughly contemporaneously with enactment of the statute and remained consistent over time,’” Department of Justice attorneys argued in their July 15 supplemental brief.
The argument will take place during the Fifth Circuit’s Aug. 7 morning session in New Orleans.
READ MORE:
Sen. Josh Hawley (R-Mo.), center, speaks to members of the media at the US Capitol in Washington, D.C., on March 5, 2024.
Photographer: Ting Shen/BloombergDiego Areas Munhoz: A prominent Republican is breaking ranks and saying that Democrats’ marquee labor bill is a “good” idea.
Sen. Josh Hawley (Mo.) told Bloomberg Law he thinks the PRO Act is a ”pretty good piece of legislation.” The bill has been a priority for unions and Democrats to overhaul US labor laws and make it easier for workers to unionize.
Hawley noted that it’s unlikely that the bill could become law given almost unanimous Republican opposition. He said he’s instead working on a different “labor law reform” bill that could get 60 votes in the Senate, and hopes former President Donald Trump would back the legislation if he’s elected in November.
“It’s a priority of mine,” Hawley said. “I would hope that he would consider supporting some labor legislation, and I’d like to write it and I’d like to get the support for him and see if we can actually get the ball moving and get something done.”
Hawley is one of the leaders of the populist wing of the Republican party, and has taken pro-labor stances that are often at odds with the rest of the party. He’s introduced a $15 minimum wage bill, voted for sick time off for railroad workers, sponsored legislation to crack down on child labor violations, and endorsed striking United Auto Workers last year.
Those positions have drawn praise from Teamsters President Sean O’Brien, who name-checked Hawley during his speech at the Republican National Convention last month.
But the PRO Act is far from garnering a consensus on Capitol Hill.
Republicans mostly deride it as a union wish list, while some Senate Democrats also haven’t fully endorsed it. Notably, vice presidential candidate hopeful Sen. Mark Kelly (D-Ariz.) is one of the few in his party to not have co-sponsored the bill—which has drawn some concerns from unions and progressives about his potential pick—although he recently said he would vote for it if it came up.
“The PRO Act is the floor of what we need for labor organizing, it’s not the ceiling,” Progressive Caucus Chair Pramila Jayapal (D-Wash.) told Bloomberg Law when asked about Kelly’s support.
WIOA WATCH: Meanwhile, PRO Act sponsor Sen. Bernie Sanders (I-Vt.) told Bloomberg Law the labor panel he chairs will mark up a reauthorization of the Workforce Opportunity and Innovation Act when lawmakers return to Washington in September. The House passed its bill reauthorizing funding for the main federal workforce development law in April by a wide margin, and lawmakers from both sides of the aisle say they’re hopeful they’ll get it over the finish line this year.
We’re punching out. Daily Labor Report subscribers, please check in for updates during the week, and feel free to reach out to us.
Continue ReadingTo contact the reporters on this story: Rebecca Rainey in Washington at rrainey@bloombergindustry.com; Diego Areas Munhoz in Washington, D.C. at dareasmunhoz@bloombergindustry.com
To contact the editors responsible for this story: Genevieve Douglas at gdouglas@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com
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