Court Blocks Overtime Rule

Labor Secretary Thomas Perez learned a harsh lesson this month. Public servants at federal agencies cannot allow their political preferences to guide their regulatory agenda. Rather, they must fulfill the mission of the agency as Congress intended.

The folks over at the Department of Labor  (DOL) do not seem to comprehend that. Once again, a court has issued an injunction against a DOL regulation. This time it was President Obama's signature overtime rule, finalized on May 23, 2016, which would more than double the salary threshold for overtime eligible employees from $23,660 to $ $47,892.

On November 22, 2016, Judge Amos Mazzant, Obama appointee Eastern Texas U.S. District Court, agreed with the argument of 21 state Attorneys General and issued a nationwide preliminary injunction against the DOL’s overtime rule.

The Fair Labor Standards Act grants the Labor Secretary authority to issue regulations that interpret which employees are exempt from overtime, but with limitations. Section 213(a)(1) of the FLSA states that “any employee employed in a bona fide executive, administrative, or professional capacity” is exempt from overtime pay requirements. Congress only gave the Secretary the power to define which employees are considered “executive, administrative, or professional” employees, not raise the salary threshold so high as to “categorically exclude” employees who perform the duties of an executive or professional.

So the question at hand for the court, “What constitutes an employee employed in an executive, administrative, or professional capacity?”

As the ruling discusses, the terms “executive, administrative, or professional” (EAP) all relate to an employee’s duties and functions, not a minimum salary level. Judge Mazzant concluded that Congress intended for employees who perform professional duties to be exempt from overtime requirements.

As Judge Mazzant states in the ruling:

While this explicit delegation would give the Department significant leeway to establish the types of duties that might qualify an employee for the exemption, nothing in the EAP exemption indicates that Congress intended the Department to define and delimit with respect to a minimum salary level.

Further, the DOL’s final rule clearly violates Congress’ intent by stating that any executive, administrative, or professional employee earning less than $913 per week “will not qualify for the EAP exemption, and therefore will be eligible for overtime, irrespective of their job duties and responsibilities.”

Again, the Judge points out that by making the salary level the litmus test for whether an employee is exempt from overtime pay, the DOL “exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test. … If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”

This ruling throws a lifeline to small businesses, employees, state and local governments, non-profits and universities that would have suffered irreparable harm had the injunction not been granted.