Labor Department to Appeal, Seek Freeze of Overtime Rule Case

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By Ben Penn

The Labor Department will appeal a judge’s decision to shoot down the Obama administration’s overtime rule and will file a motion to freeze the litigation, buying time for the agency to issue a new rule.

“On October 30, 2017, the Department of Justice, on behalf of the Department of Labor, filed a notice to appeal this decision to the U.S. Court of Appeals for the Fifth Circuit,” the DOL said in a statement. “Once this appeal is docketed, the Department of Justice will file a motion with the Fifth Circuit to hold the appeal in abeyance while the Department of Labor undertakes further rulemaking to determine what the salary level should be.”

Rather than designed to preserve the prior DOL’s high-profile regulation, the appeal’s pairing with a motion to stay may allow for the agency to rewrite the rules governing time-and-a-half pay eligibility. If the motion is granted and a new overtime rule is eventually published, the department is likely to then ask the court to declare the litigation moot.

“I think that a new notice of proposed rulemaking would make a ruling by the Fifth Circuit unnecessary,” Angelo Amador, executive director of the National Restaurant Association’s Restaurant Law Center, told Bloomberg Law.

The filings, which Bloomberg Law reported Oct. 27, are likely geared to ensure that if the DOL does issue a new rule, it need not worry about a federal judge’s ruling that called into question whether the agency has the authority to rely on workers’ salaries as a determinant for overtime access.

The rule, which was blocked before it went into effect, doubled the annual salary level—to more than $47,000—under which employees qualify for overtime wages for all work beyond 40 hours a week. Labor Secretary Alexander Acosta, in several public statements, has said the current threshold of $24,000 that was set in 2004 should be updated. But Acosta has also said he’s concerned it would create a “shock to the system” to increase the threshold to $47,000, which under the rule would have also been raised every three years.

Acosta’s Overtime Rule

The DOL is in the midst of reviewing more than 140,000 public comments recently submitted on how and whether the agency should reconsider overtime eligibility. Acosta has suggested a salary level in the range of $33,000 may be more appropriate.

Judge Amos Mazzant’s permanent injunction on Aug. 31 found that the DOL focused too heavily on the amount of money workers make, instead of their job duties, for overtime eligibility.

But legal observers saw his reasoning as either flawed or at least unusual because of decades of previous labor secretaries using a worker’s salary and duties to set overtime exemption.

By appealing that order, the DOL earned kudos from the worker advocacy group National Employment Law Project.

“It remains to be seen how robust a threshold they will set,” Judy Conti, NELP’s federal advocacy coordinator, told Bloomberg Law. “They’re working to preserve their authority and they’re working to preserve the rightful authority of future Departments of Labor, and that’s important.”

Meanwhile, in the event that the $47,000 threshold is not maintained, the Texas AFL-CIO revived its effort to intervene in the case. The labor federation affiliate Oct. 30 notified the Fifth Circuit that it would be appealing Mazzant’s order to deny the union’s motion to intervene.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editor responsible for this story: Chris Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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