DOL Overstepped Authority in Overtime Rule, States Tell Court

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By Jon Steingart

The Obama administration exceeded its authority when it roughly doubled—to about $47,500—the annual salary threshold below which workers are eligible for overtime pay, a group of 21 states challenging the rule told the U.S. Court of Appeals for the Fifth Circuit in a brief filed Jan. 17 ( Nevada v. DOL , 5th Cir., No. 16-41606, brief filed 1/17/17 ).

The brief marked the first occasion challengers to the rule told the appeals court why it should uphold a district judge’s Nov. 22 order that preliminarily enjoined the rule. The DOL appealed the injunction.

The salary threshold update was scheduled to take effect Dec. 1, but Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas granted a request by the states and business groups to temporarily block it. He found the Fair Labor Standards Act doesn’t empower the Department of Labor to establish a salary threshold for determining whether someone qualifies as an executive, administrative or professional employee who is ineligible for overtime.

“One federal court has already recognized that the Department of Labor’s new rule diverges sharply from the text of the actual federal law,” Nevada Attorney General Adam P. Laxalt said in a statement provided to Bloomberg BNA. “I am hopeful and expectant that any court to review this law will reach the same conclusion, and I am proud to be leading the fight against this especially intrusive, unlawful federal overreach.” Nevada and Texas are leading the states' challenge.

An alternate ground for voiding the rule as to the states is that the Tenth Amendment to the U.S. Constitution prohibits the DOL from applying the salary test to them unless Congress makes “unmistakably clear” its intent for the FLSA to apply to the states, the brief says. Any argument that the DOL’s interpretation is entitled to deference because the FLSA falls under its purview would strengthen the states’ contention that the statute lacks the unmistakable clarity needed to apply it to them, they said.

Amicus briefs in support of the states’ position are due on or before Jan. 24, and the DOL’s reply is due Jan. 31. President-elect Donald Trump has expressed antipathy toward the rule and Obama administration regulations, but he hasn’t said whether he’ll order the DOL to drop the appeal after he’s inaugurated Jan. 20.

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

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