Labor Department Argues That Texas Court Erred When It Blocked Overtime Rule

On December 15, 2016, the U.S. Department of Labor (DOL) filed the opening brief in its appeal of a nationwide preliminary injunction that blocks the agency from implementing its revisions to overtime rules under the Fair Labor Standards Act (FLSA).

In its brief to the U.S. Court of Appeals for the Fifth Circuit, the DOL asserts that Judge Amos L. Mazzant III, a federal judge for the Eastern District of Texas, erred as a matter of law when he issued the injunction in State of Nevada, et al. v. United States Dept. of Labor, et al., on November 22, 2016. The injunction halted the implementation of regulatory revisions that were scheduled to go into effect on December 1, 2016, and which would have more than doubled the minimum salary requirements for the FLSA’s major white collar overtime exemptions.

In issuing the injunction, Judge Mazzant found that the DOL exceeded its authority by increasing the minimum salary level contained in the regulations from $455 per week to $913 per week. He ruled that the use of the new threshold would supplant the duties tests and thereby exclude from exemption many bona fide executive, administrative, and professional employees under Section 13(a)(1) of the FLSA.

In its appellate brief, the DOL contends that Judge Mazzant’s decision is foreclosed by a Fifth Circuit decision from 1966, Wirtz v. Mississippi Publishers Corp., and is in considerable tension with a 1997 Supreme Court of the United States decision, Auer v. Robbins.

The DOL emphasizes that for the past 75 years, it has been issuing regulations that require employees to meet a combination of three tests—a salary level test, a salary basis test, and a duties test—to be treated as exempt executive, administrative, or professional employees. The DOL contends that Judge Mazzant’s reasoning would invalidate all versions of the salary-level test that have been used for the past 75 years. The agency further contends that the salary level test always has excluded from exemption some individuals who pass the duties test.

An implicit theme of the DOL’s brief is that it is being penalized for making concessions to the business community during the rulemaking process. The DOL emphasizes that it could have revised the duties tests for the exemptions and responded to the concerns of employee advocates by resurrecting a cap on the percentage of time an employee could spend on non-exempt work and still be treated as exempt. However, the business community was strongly opposed to this, and the DOL concluded that these competing concerns were better addressed by increasing the salary threshold.

The DOL also asserts in its brief that the 21 states that are plaintiffs in the lawsuit failed to meet the irreparable harm standard necessary for a preliminary injunction. The DOL notes the plaintiff states did not file suit until four months after the regulations were published and then waited an additional three weeks before moving for the injunction. The DOL contends that of the seven states that submitted declarations arguing irreparable harm, none had included facts sufficient to support their cost estimates or the assumptions on which they were based. Finally, the DOL contends that an injunction should not have been issued as to employers who were not parties to the lawsuit, as the impact of the proposed regulations would vary from one employer to another based on the characteristics of their workforces. 

Amicus briefs in support of the DOL’s position are due on or before December 23, 2016. The states’ response brief is due on or before January 17, 2017.

Ogletree Deakins will continue to cover the final regulations in depth on our Wage and Hour blog in addition to the firm’s Overtime Solutions Center, which includes a variety of resources on the overtime rule and is frequently updated.