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Injunction Ruling Expected Next Week In DOL Overtime Case

Fri, November 18, 2016 7:18 AM | FSA (Administrator)

Law360, Dallas (November 16, 2016, 7:18 PM EST) -- A Texas federal judge said he’ll decide by Nov. 22 whether to stop the U.S. Department of Labor’s new overtime rules from taking effect as scheduled on Dec. 1, as 21 states and dozens of business groups push for an end to what they say is an unlawful change.

At a hearing in the Eastern District of Texas on Wednesday, U.S. District Judge Amos Mazzant said he understood the pressure of the Dec. 1 deadline, and told the parties he may take judicial notice of a Monday report from the Congressional Budget Office projecting if the overtime expansion rule were halted, employers could save $1 billion in revenue. But he said it’s not the role of the court to get involved in policy decisions and that he’s not making a decision in the case based on whether he thinks it’s good or bad that the overtime exemption salary threshold has been raised.

The DOL this year revised the Fair Labor Standard Act’s so-called "white collar" exemption by raising the salary threshold to $47,476, allowing employees who make less than that to be covered by the law’s minimum wage and overtime requirements. An estimated 4.2 million workers who are currently classified as exempt under the white collar rule make less than the threshold salary.

Arguing for business groups including the U.S. Chamber of Commerce, National Association of Manufacturers and the National Retail Federation, Maurice Baskin of Littler Mendelson told the court the DOL's new salary threshold is a “fundamental, radical social policy change” and said the agency should use the same salary test it has been using for 75 years.

“You would have to be a rubber stamp to let this go by,” Baskin said.

He also urged the court to issue an injunction in part so the rule could be reviewed by President-elect Donald Trump’s administration, which legal experts have speculated would likely reverse the overtime changes.

Judge Mazzant said in his view what the next administration may do with the rule is not relevant, but is instead “pure speculation.” And a new president would have to go through a rulemaking process to change the DOL rule, which would take time, he said.

“It’s not like a new president could just wipe this away,” Judge Mazzant said.

Arguing on behalf of 21 states that in September sued to block the rule, Lawrence VanDyke of the Nevada Attorney General’s office said the DOL can’t have a salary test that categorically excludes a substantial number of workers previously treated as exempt executive, administrative and professional employees. Congress delegated to the DOL the definitions of those terms, but the agency has now overstepped its discretion by trying to raise worker salaries.

During the DOL’s argument, Judge Mazzant repeatedly questioned the justification for how 4.2 million workers that today are classified as exempt would be reclassified as non-exempt despite having the exact same job duties. He questioned whether the rule change equated to a de facto salary-only test and said Congress hasn’t authorized the DOL to classify white collar workers based on salary alone.

He also returned several times to the idea that for 75 years, the salary levels weighed as part of the DOL’s overtime exemption guidance acted as a floor. He said the new rule’s salary jump “seems like a much more drastic change” and that the substantial increase in the salary threshold could lead to the inequitable treatment of workers who each fulfill the duties of executive, administrative and professional employees but may be paid differently. A convenience store manager that clearly acts as an executive but makes only $47,000 a year would be treated differently than a manager who earns $47,500 a year, he said.

DOL attorney Julie Saltman of the U.S. Department of Justice told Judge Mazzant the salary factor works in tandem with a look at a worker’s duties to provide a more comprehensive evaluation of whether they actually work in a bona fide executive, administrative or professional capacity. Saltman said the salary level set in 2004 is below the poverty level for a family of four, which she said is “not appropriate for white collar workers.”

The department had made a course correction, fixing the misstep that set the 2004 salary limit at $23,660, which was not a drastic change, she said. Saltman further argued that even if the bump to $47,476 was a drastic change, it was one within the DOL’s authority to do so because the agency’s path to that decision is reasonable and so is entitled to deference from the courts. The agency’s rule doesn’t have to be the best rule possible; it just has to be reasonable, she said.

If the preliminary injunction motion is denied, a hearing will be held Nov. 28, on a pending summary judgment motion, Judge Mazzant said from the bench.


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