Two federal court docket rulings in Texas throughout the previous week diverged on the query of whether or not to dam enforcement of the U.S. Division of Labor’s time beyond regulation rule, with one choose on Monday denying a request for keep or preliminary injunction of the rule filed by a know-how firm and one other granting an injunction of the rule insofar because it applies to Texas state staff.
Within the former case, Flint Avenue, LLC v. U.S. Division of Labor, Decide Sam Cummings held that plaintiff Flint Avenue did not reveal irreparable hurt ensuing from the rule — the primary a part of which took impact July 1 — that may justify an injunction.
Nevertheless, Cummings additionally stated he would think about the deserves of the corporate’s claims difficult the rule’s different provisions, together with DOL’s proposal to once more increase the edge for time beyond regulation pay eligibility in January 2025.
Within the latter case, State of Texas v. U.S. Division of Labor, Decide Sean Jordan held that DOL exceeded its statutory authority in issuing the rule. Particularly, Jordan stated DOL’s effort to boost the wage threshold successfully categorized staff as exempt on the premise of their wage ranges reasonably than their job duties as govt, administrative {and professional} staff.
Jordan stated he would grant an injunction as a result of Texas was more likely to succeed on the deserves and in any other case met the necessities for an injunction. However as a result of his choice was restricted in scope, the July 1 improve grew to become efficient for almost all of employers.
In the meantime, DOL continues to be awaiting the final result of a 3rd, separate case — additionally in a Texas district court docket — wherein a coalition of enterprise teams led by the Plano Chamber of Commerce claimed that the time beyond regulation rule violates the Honest Labor Requirements Act in addition to the Administrative Process Act. The plaintiffs search injunctive and different aid, they usually have requested that the court docket vacate the ultimate rule.
Chevron doctrine’s loss of life a possible risk
Jordan’s choice occurred on the identical day the U.S. Supreme Court docket in Loper Brilliant Enterprises v. Raimondo struck down its Chevron deference doctrine requiring federal courts to defer to company interpretations of imprecise statutes. Jordan cited the end result of Loper Brilliant in his personal choice, stating that his evaluation of the time beyond regulation rule “fastidiously follows Loper Brilliant’s controlling steering and the APA.”
Analyzing the DOL’s implementation of the Honest Labor Requirements Act, Jordan wrote {that a} wage threshold requirement which “successfully displaces” the act’s exemption from time beyond regulation pay for govt, administrative {and professional}, or EAP, staff “flatly contravenes” DOL’s authority.
“The applying of a wage threshold for the EAP Exemption solely comports with the Division’s authority beneath the FLSA, if in any respect, to the extent such threshold serves as a believable proxy for the classes of staff in any other case exempted by the duties take a look at,” he stated. “Meaning a Division-invented take a look at, untethered to the textual content of the FLSA, that systematically deprives staff of the EAP Exemption after they in any other case meet the FLSA’s duties take a look at, is essentially illegal.”
Staff should not solely carry out particular duties with a purpose to qualify for the EAP exemption, referred to as the “duties take a look at,” however in addition they should earn pay above the wage threshold set by DOL, referred to as the “wage foundation take a look at.”
In line with the Congressional Analysis Service, the DOL has carried out a wage foundation take a look at for figuring out time beyond regulation eligibility for the reason that FLSA first took impact in 1938. The company’s technique for doing so has diversified in that point, although, and it was not till 2004 that the administration of former president George W. Bush created a regular duties take a look at and wage degree take a look at for all EAP staff.
Regardless of its longevity, DOL’s wage foundation take a look at has been examined within the courts. The newest instance is a 2022 lawsuit introduced by a Texas restaurant operator who alleged that DOL lacked the authority to make use of a wage foundation take a look at in any respect. A federal choose rejected this declare final yr, holding in R.U.M. Enterprises v. U.S. Division of Labor that the take a look at met the two-part framework for company deference beneath the Chevron doctrine.
Chevron’s overturning might open the doorways for an attraction of that call, nonetheless. The plaintiff in R.U.M Enterprises appealed the choice to the fifth U.S. Circuit Court docket of Appeals, which issued a request to the events for supplemental briefing on the query of whether or not Loper Brilliant has any impact on how the case needs to be determined. The fifth Circuit set a date of Aug. 7, 2024, for oral arguments within the case.