Oral Argument in Overtime Appeal to be Held in Early October

The U.S. Court of Appeals for the Fifth Circuit has tentatively scheduled oral argument for the week of October 2 in a highly watched case involving revised overtime regulations that were supposed to become effective last December. Those regulations were temporarily enjoined on a nationwide basis by a federal judge in Texas just before Thanksgiving.

By way of background, the U.S. Department of Labor (DOL) under President Obama issued final regulations in May 2016 that would have more than doubled the minimum salary requirement for the major white-collar exemptions under the Fair Labor Standards Act (FLSA) from $455 per week to $913 per week. Annualized, that would have been an increase in the salary threshold from $23,660 per year to $47,476 per year.

The final regulations were scheduled to become effective on December 1, 2016. However, Judge Amos L. Mazzant III, a federal judge for the Eastern District of Texas, issued a temporary injunction blocking their implementation. At that point, some employers already had made changes to pay structures and job assignments in anticipation of the effective date.

At issue on appeal is whether the DOL has the authority to set a salary level as one of its tests for the white-collar exemptions. When the Obama administration filed the appeal with the Fifth Circuit in December 2016, the DOL asserted that the salary level of $913 per week contained in the regulations should not have been blocked. However, in a reply brief filed by the Trump administration on June 30, 2017, the DOL asked the Fifth Circuit to uphold its right to use a salary test but not to address the validity of the $913 threshold because the DOL intends to revisit that salary threshold through new rulemaking.

The DOL stated in its reply brief that it “has decided not to advocate for the specific salary level ($913 per week) set in the final rule” and that it “intends to undertake further rulemaking to determine what the salary level should be.” In the reply brief, the DOL also stated that, in light of the ongoing litigation, the DOL will not “proceed immediately with issuance of a notice of proposed rulemaking” and instead “will publish a request for information seeking public input on several questions that will aid in the development of a proposal.”

Consistent with this statement in the reply brief, the DOL subsequently published a Request for Information (RFI) in the Federal Register on July 26, 2017, seeking comments in response to 11 sets of questions related to both the salary and duties tests for the white-collar exemptions. The comment period ends on September 25, 2017, which will be prior to oral argument. However, the process of analyzing the comments and preparing new regulations can be quite lengthy, and one would expect the Fifth Circuit to issue a decision before the DOL proposes revisions to the white-collar exemption tests contained in the regulations.

The Fifth Circuit’s order tentatively setting oral argument for the week of October 2 gives the attorneys in the case the opportunity to notify the appellate court of any potential scheduling conflicts. An order setting a specific date in early October for the oral argument should be issued shortly.