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Another legal challenge against the U.S. Department of Labor’s (DOL) minimum salary threshold for Fair Labor Standards Act (FSLA) overtime regulations continues in the wake of the November 15 ruling from a Texas federal court judge that vacated the DOL’s July 2024 rule, reverting the threshold back to a rule from five years ago.
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Challenge to statutory authority
“We are challenging the DOL’s rule from 2019, which became effective in raising the minimum salary requirements in January 2020,” said Luke Wake, an attorney at the Pacific Legal Foundation and co-counsel for the plaintiff in Robert Mayfield v. U.S. Department of Labor.
The lawsuit claims that the DOL lacks any statutory authority to impose rules that condition the Executive, Administrative, and Professional (EAP) overtime exemption on the payment of minimum salaries.
Wake, whose law firm represents Dairy Queen restauranteur Robert Mayfield and other business owners, noted that although the Texas federal judge “accepted that argument in blocking the 2024 rule from further raising minimum salary requirements,” the 2019 rule continues to be in effect, which is part of the bigger picture for the plaintiff’s case.
“Our constitutional argument is that the FLSA violates the nondelegation doctrine if, in fact, Congress gave the DOL authority to impose minimum salary rules because there is nothing in the statute giving any direction at all to the DOL for deciding how high to raise minimum salary rules,” Wake stressed.
Appeals court panel ruling
However, a three-judge panel of the 5th Circuit Court of Appeals affirmed a lower court ruling on September 11 that upheld the DOL’s authority to set minimum salary requirements for the EAP exemption to overtime pay under the FLSA, finding that the 2019 rule was within the DOL’s statutory authority to “define and delimit” the terms of the exemption and that this delegation of power did not violate the nondelegation doctrine.
The Texas federal judge also held that the DOL has the authority to use salary as a proxy for EAP status within limits but also that the DOL’s power to “define and delimit” EAP terms is not unbounded.
Wake, along with two other attorneys from the Pacific Legal Foundation representing Mayfield, submitted an en banc petition to the entire 5th Circuit Court. This petition requests the Court to review and decide on the 2019 rule. In response to the petition, the Court has directed the DOL to provide a formal response.
Additionally, there is a possibility that the case could be escalated to the U.S. Supreme Court, should the plaintiff choose to appeal at that level.
DOL actions post-election
Regarding the 2024 rule, Wake said it is unlikely that the DOL will appeal the decision that deemed it unlawful and anticipates that the DOL will seek to withdraw the rule after President-Elect Donald Trump is sworn into office on January 20, 2025. He suggested that the DOL may file an appeal and request the 5th Circuit hold the case in abeyance, effectively pausing it while the Trump Administration develops a new rule.
But, when it comes to the 2019 rule, Wake does not think the Trump Administration will undo it since the rule was implemented during Trump’s first term in office, where the annual salary threshold increased to $35,568.
Long-term implications of legal challenge
Wake believes that the long-term implications of the legal challenge against the DOL’s 2019 rule could affect the development and enforcement of FLSA regulations and alter the balance of power between Congress and the DOL.
If the challenge is successful, it may limit the DOL’s capacity to enforce minimum salary requirements under the EAP exemption unless Congress explicitly amends the FLSA to set those thresholds.
Furthermore, even if the DOL cannot impose minimum salary rules, it could still incorporate salary considerations in its enforcement strategies, possibly prioritizing investigations into misclassification for lower-paid workers.
“The point in all this is that it should be for Congress alone to decide whether there should be a minimum salary requirement for the EAP exemption, and if so, Congress must provide meaningful direction to control and limit DOL’s discretion,” Wake added.
The Loper Bright effect
The U.S. Supreme Court’s 2024 ruling in Loper Bright that overturned the Chevron doctrine was referenced in the Mayfield ruling regarding the DOL’s 2019 rule and by the Texas federal court judge for the DOL’s 2024 rule.
Wake said that Loper Bright also “signaled that there are other important separation of powers issues because, in some cases, the best meaning of a statute is that it does not delegate rulemaking authority.”
He also noted that judges may disagree on the best meaning of the statutory text, explaining how the 5th Circuit panel’s decision in Mayfield differs from Supreme Court Justice Brett Kavanaugh’s interpretation of the FLSA regarding authority to impose rules regulating salaries for exempt employees. The
