The tortured path of the DOL white collar/OT regulations

Mike Staebell, Iowa Employment & Labor Law, Iowa Wage and Hour Watch, Des Moines Iowa, Dickinson Law Firm

Posted on 04/20/2017 at 10:17 AM by Mike Staebell

It’s hard to keep track of all of the Obama-era Department of Labor regulations that have gone by the wayside since the installation of the Trump administration. One regulation that has had many twists and turns, and is still in limbo, is the Fair Labor Standards Act (FLSA) regulation that raised the minimum salary requirements for certain White Collar Exemptions. It has also been called the “Overtime Rule,” for short. Charting the path of this controversial rule may help us understand where it stands today.

The Regulation
On May 18, 2016, the DOL issued final regulations which more than doubled the minimum salary requirements – from $455/week to $913/week -- for the Executive, Administrative, Professional, Computer, and Highly-Compensated exemptions to apply. The final regulations contained additional provisions, such as automatic annual increases to the salary threshold. Those regulations were due to take effect on December 1, 2016. 

It is fair to say that this final rule was controversial and unpopular with many businesses. Yet employers were well-advised to prepare for the changes, and many of them did.     

The Lawsuits and Preliminary Injunction
As employers prepared to implement the new regulations, two separate lawsuits were filed challenging the final rule. One was brought by a coalition of business groups, led by the U.S. Chamber of Commerce. The second lawsuit was brought on behalf of twenty-one states, including Iowa. This second lawsuit included a motion seeking a preliminary injunction to stop the implementation of the final rule. Both lawsuits were filed in federal court in Texas, and they were soon consolidated into a single action.

On November 22, 2016, the judge in Texas issued a nationwide preliminary injunction preventing the regulations from taking effect on December 1, 2016.

Appeal of the Preliminary Injunction
The Obama Department of Labor filed an appeal of the preliminary injunction, and asked the Fifth Circuit Court of Appeals for an expedited briefing schedule. That request for a speedier-than-normal process reflected the fact that President-Elect Trump would take office on January 20, 2017. The Fifth Circuit agreed to DOL’s request and set a February 7 deadline. 

On January 25, 2017, a few days after President Trump’s inauguration, the DOL reversed course and asked the Fifth Circuit for an extension of time to file its reply brief “to allow incoming leadership personnel adequate time to consider the issues.” The Fifth Circuit reset the deadline for the DOL to file its reply brief to May 1, 2017.

Back to the Lawsuits
All the while, the consolidated actions are still alive and progressing in the federal district court in Texas. On January 3, 2017, the Texas judge denied the DOL’s request to stay the lawsuit pending the outcome of the appeal of the preliminary junction that was issued in November. 

The Motion for Intervention
Uncertain what would happen with the DOL’s stance in the litigation, the Texas AFL-CIO filed a motion in December 2016 asking to be allowed to intervene as a defendant along with the DOL. The Texas AFL-CIO asserted: “With the recent presidential election, and particularly as more information becomes available regarding the incoming Administration’s plans, policy and appointments, the Texas AFL-CIO has grave concerns as to whether its interests in the Final Rule will be represented by the DOL.” The court has not yet ruled on the AFL-CIO’s motion. 

The Motion for Summary Judgment
The federal judge in Texas also is currently considering a motion for summary judgment that was filed by the business group plaintiffs. That could result in a ruling that all or parts of the final rule were properly issued, in which case the preliminary injunction could be dissolved and the rule could spring back to life.  Or, the court could rule that all or parts of the rule were improperly issued and the final rule could be declared dead. It is also possible that the current administration may withdraw its appeal and abandon its defense of the regulations. 

Secretary of the DOL Nominee Acosta’s Statements
At his March 22, 2017 hearing before the Senate's Health, Education, Labor & Pensions Committee, Secretary of Labor nominee Alexander Acosta was unwilling to commit to defending the regulations should he become Secretary of Labor. He said he must first evaluate the legal merits of the District court's ruling on the preliminary injunction. 

Acosta also said he was not in favor of the automatic salary increases. But he declined to take a position on the appropriate amount of a salary threshold, citing concerns about the adverse effects of a $913 per week salary requirement on the US economy, because he believes a doubling of the current $455 per week level creates a "stress on the system." At the same time, Acosta also said it was troubling that the salary threshold had not been adjusted since 2004, and that he would look at this matter very closely if confirmed. Acosta inferred that he may be open to considering a figure in the $635/week range (equal to $33,000 annually).

Acosta’s nomination has been advanced by a Senate committee, but the full Senate has yet to schedule his vote. 

Back to the Appeal of the Preliminary Injunction
As the May 1 deadline for briefs for the appeal of the preliminary injunction approached, the DOL requested another delay, pushing the deadline out to June 30, 2017. Although the court has not yet ruled on it, expectations are that it will be approved. The road continues to twist and turn.  

Where Are We Now?
If your head is spinning from following this winding road, just remember today’s key message. The updated DOL salary standards for certain white collar exemptions are not dead yet!  Stay tuned to Wage & Hour Watch for future developments.  

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.


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