Chamber Advances Legal Attack on DOL's Overtime Rule

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By Ben Penn

Oct. 17 — Business lobbying groups urged a federal court to expedite their challenge to the Labor Department’s overtime regulation and find the rule “unlawful” without holding a trial ( Plano Chamber of Commerce v. Perez , E.D. Tex., No. 4:16-cv-0732, summary judgment motion filed 10/14/16 ).

The legal filing, coordinated with overlapping litigation from 21 states, may represent the final chance for critics to block or delay the controversial rule before it takes effect Dec. 1. But the litigation, similar to an attempt to block the rule in Congress, is considered a long shot.

The DOL regulation doubles the salary threshold under which employees are eligible for overtime pay and updates it every three years based on inflation. The agency estimates 4.2 million additional workers will be eligible for time-and-a-half their regular hourly wage when exceeding 40 hours in a workweek.

The U.S. Chamber of Commerce and more than 50 other associations filed a motion for expedited summary judgment, requesting oral arguments at the court’s “earliest convenience.” Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas will decide whether the DOL exceeded its authority under the Fair Labor Standards Act and Administrative Procedure Act, as the business groups claim.

President Barack Obama issued a memo in 2014 directing the DOL to update the salary threshold for overtime exemption. The rule is considered among the most important items in Obama’s working families agenda.

The states are asking for an emergency preliminary injunction, arguing they would be irreparably harmed if the court allows the rule to be implemented in December as planned. Mazzant is also assigned to that case and has scheduled a Nov. 16 hearing on the injunction request.

The Chamber, which used some of the same legal arguments as the states, wants the rule scrapped. The business groups asked the judge to follow the same timetable when ruling on the two parties’ motions.

DOL Said to Have Exceeded Authority

The argument that the DOL exceeded its authority presents “only legal issues that require no discovery or factual development beyond administrative record,” the Chamber said in attempting to convince the court that a trial isn’t necessary.

The DOL argued when it rolled out the final version of the rule that it has wide discretion under the FLSA to implement the law’s white-collar exemption, including by setting the threshold level. The department said that discretion has been backed by courts.

Even if the DOL has the authority to set the threshold, the Chamber and the states argue that the department should have to go through the notice-and-comment rulemaking process every time it wants to change the level.

“Any increase in the salary level must be based upon the comments submitted and the actual facts and information existent at the time of the increase,” the Chamber argued. “The DOL cannot lawfully put the salary level test on autopilot and effectively immunize itself ... from the procedural obligations of the APA.”

The indexing provision is intended by the DOL to prevent the overtime rule from inflation-related erosion. The department said when it unveiled the rule that the idea is to keep the threshold fresh, so that regulators don’t have to go back to the drawing board every few years.

It’s possible that the judge could grant partial summary judgment, setting aside only the indexing provision, while keeping the base salary threshold intact on Dec. 1.

The DOL estimates that new salary level of $47,476 will rise to more than $51,000, based on wage growth, with the first scheduled update on Jan. 1, 2020. The regulation mandates that the triennial updates are pegged to the nation’s poorest Census region.

Paul DeCamp, who ran the DOL’s Wage and Hour Division during the George W. Bush administration, and Fordham University law professor Aaron Saiger told Bloomberg BNA before the lawsuit was filed that they expected opponents to consider a number of factors in deciding where to file the lawsuits. Mazzant, who was nominated by Obama in 2014, is the only one of the three judges serving in the Eastern District’s Sherman, Texas, division to be appointed by a Democratic president.

Littler Mendelson P.C. in Washington is representing the Chamber of Commerce. The Department of Justice is expected to represent the Labor Department.

To contact the reporter on this story: Ben Penn in Washington at

To contact the editor responsible for this story: Peggy Aulino at

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