Federal judges questioned Wednesday whether or not the U.S. Division of Labor’s wage foundation check for figuring out extra time pay eligibility below the Truthful Labor Requirements Act exceeds the statutory authority delegated to the company by Congress.
Throughout oral arguments earlier than the fifth U.S. Circuit Court docket of Appeals in Mayfield v. U.S. Division of Labor, the three-judge panel repeatedly requested Courtney Dixon, counsel for the federal government, to establish the place within the FLSA’s provisions Congress explicitly allowed DOL to contemplate wage when classifying workers as exempt or nonexempt.
“The textual content of the statute doesn’t allude to or point out wage or compensation,” stated Decide Cory Wilson.
Dixon stated that as a result of the FLSA’s statute specifies that the regulation’s exemption is “outlined and delimited” by division laws, DOL could incorporate a wage foundation check as a part of its inquiry. She stated this stance was upheld partially by the tenth Circuit’s 1944 choice in Walling v. Yeakley.
“[Yeakley] regarded precisely to those phrases, ‘outline’ and ‘delimit,’ and it acknowledged not solely does the Secretary have the authority to outline these phrases, but additionally [to] delimit — to maneuver from the final to the extra particular, to attract traces on this space,” Dixon stated. “And Congress anticipated that.”
She additionally cited the U.S. Supreme Court docket’s 2007 choice in Lengthy Island Care at Dwelling, Ltd. v. Coke. Within the case, which involved a unique set of FLSA exemptions, the court docket held that “Congress explicitly left gaps for the company to fill by utilizing the phrase ‘outline and delimit’ that included the scope and definition of the final statutory phrases,” Dixon stated.
Responding to that line of argument, Decide Jennifer Walker Elrod stated that Congress has explicitly talked about wage necessities and the way to calculate them when amending the FLSA. One latest instance got here in 2018, when Congress amended the FLSA to exempt skilled baseball gamers who earn a weekly wage equal to the federal minimal wage for a 40-hour workweek.
“It looks like that actually cuts in opposition to you that once they needed to do minimal salaries, [Congress said] we will do minimal salaries,” Elrod stated. “However right here, there’s nothing indicating that that was going to be tied to this.”
Dixon stated the baseball participant exemption truly helps DOL’s authority to set a wage foundation check, as a result of “Congress has by no means disturbed the division’s method, and the truth that Congress amended the FLSA in opposition to the division’s understanding and has itself discovered wage to be a related criterion that it has put into explicit exemptions — it solely helps the division.”
A view of the Supreme Court docket of the US on Sept. 7, 2022, in Washington, D.C. Counsel for the plaintiffs in Mayfield cited the court docket’s landmark June 2024 choice ending Chevron deference in assist of a problem to the U.S. Division of Labor’s wage foundation check for figuring out extra time pay eligibility.
Caroline Colvin/HR Dive
Finish of Chevron deference spurs reconsideration
The plaintiff in Mayfield challenged DOL’s 2019 extra time rule partially as a result of the company allegedly lacks the statutory authority to undertake a wage foundation check. A Texas district court docket rejected that argument final yr, holding that such a check met the framework for company deference articulated by the Supreme Court docket in Chevron v. Pure Sources Protection Council and was not foreclosed by canons of statutory development.
The Supreme Court docket has since overruled Chevron, holding within the landmark June choice Loper Shiny Enterprises v. Raimondo that courts should train impartial judgment in deciding whether or not an company has acted inside its statutory authority, relatively than deferring to affordable company interpretations of ambiguous statutes.
Loper Shiny shook the authorized panorama, attorneys have since advised HR Dive, and it prompted the fifth Circuit to request supplemental briefing from the events in Mayfield on the query of what impact, if any, the top of Chevron deference had on the case.
Luke Wake, counsel for the plaintiffs, stated that Loper Shiny supplies a normal of evaluate that reveals the textual content and construction of the FLSA “exempts based mostly on duties, not {dollars}” and that DOL’s use of the wage foundation check “arrogates Congress’ energy because the lawmaker.” However the fifth Circuit appeared to push again on the notion that the textual content clearly prohibited consideration of things aside from an worker’s duties.
“I don’t know that I’m agreeing with you that the textual content of the statute is obvious to the extent that it talks about bona fide workers [and] the authority of the company to outline and delimit what falls inside this exception,” Wilson advised Wake.
Wake cited the 2018 Supreme Court docket choice in Encino Motorcars, LLC v. Navarro, et. al., which he stated “emphasizes that […] you don’t put a thumb on the dimensions of deciphering the FLSA exemptions to realize any particular objective. It’s important to give these exemptions a good studying, and that’s exactly what we’re asking the court docket to do right here.”
Dixon, in the meantime, stated that the top of Chevron doctrine doesn’t essentially imply that DOL’s long-standing interpretation of the FLSA exemption language needs to be referred to as into query.
“We predict that Loper Shiny confirms the division’s regulation on this case,” Dixon stated. “This isn’t a conventional Chevron case when it comes to there being ambiguous statutory language that we’re making an attempt to know if there was an implicit delegation of authority to the company.”
Elrod and Wilson questioned the FLSA’s use of the phrases “outline” and “delimit” and whether or not the regulation’s provisions are so broad as to be unconstitutional. Particularly, the judges cited the nondelegation doctrine, which limits Congress’ skill to cede legislative energy to different entities.
“If outline and delimit is capacious sufficient to incorporate this minimal wage rule below this exemption, don’t we’ve got a nondelegation drawback?” Wilson stated. “Is it defensible that the company can do no matter it needs to?”
Dixon denied that DOL claims it could actually set any wage stage and stated that the FLSA as an alternative guides the company in setting a wage stage simply as a lot because it guides the setting of a duties check. She additionally famous that DOL’s consideration of information and enter from stakeholders additionally serves as a information.
“Congress put within the statute this exemption […] whereas delegating to division authority to work out the small print,” Dixon stated. “That’s precisely the type of delegation that the Supreme Court docket recognized in Loper Shiny, a permissible one in every of an express delegation to the company.”
A view of the John Minor Knowledge U.S. Court docket of Appeals Constructing, location of the fifth U.S. Circuit Court docket of Appeals, in New Orleans, La. The court docket held oral arguments within the U.S. Division of Labor’s wage foundation check case on Aug. 7, 2024.
Rex_Wholster by way of Getty Photographs
Decide says nixing check might result in ‘precarious place’
DOL’s use of a wage foundation check goes way back to 1938, based on the Congressional Analysis Service, and judges referred to this historical past in questioning the Mayfield plaintiffs.
Wilson requested Wake whether or not this reality would possibly present motive to grant deference to DOL in accordance with the Supreme Court docket’s 1944 precedent set in Skidmore v. Swift & Co., wherein the court docket stated judges might look to sure company interpretations and opinions for steering.
“Congress has amended the FLSA many occasions. They’ve by no means touched the minimal wage rule,” Wilson stated. “So that you’ve bought one thing you’re asking us to upend that’s [86] years outdated.”
Wake stated the company’s long-standing interpretation of the FLSA as permitting for the usage of a wage foundation check doesn’t entitle it to deference below Skidmore as a result of DOL’s interpretation shouldn’t be persuasive. He stated the Supreme Court docket rejected the same interpretative method towards the FLSA in its 1944 Addison v. Holly Hill Fruit Merchandise, Inc. choice, which involved a division exemption that was based mostly on the geographical scope of labor carried out.
“The company is doing the identical factor right here,” Wake stated. “As a matter of basically administrative comfort, they’re utilizing minimal wage as a kind of screening mechanism to get on the kind of workers who’re truly performing the precise duties. However minimal wage guidelines will not be an alternative choice to inspecting the workers’ duties.”
However Wilson famous that the FLSA’s exemption additionally doesn’t point out the time period “duties” and as an alternative refers solely as to whether workers work in an govt, administrative or skilled “capability.”
The court docket additionally thought of the proposition {that a} ruling in favor of the Mayfield plaintiffs would create a circuit cut up on the problem; “You’d put us in a precarious place, wouldn’t you?” Elrod requested Wake.
Wake responded that whereas such a choice would create a circuit cut up, the problem is well timed on condition that DOL just lately printed a remaining rule that raised the minimal wage threshold for extra time eligibility. The identical rule would implement yet one more enhance starting January 2025 and would routinely enhance the edge each three years thereafter.
“Our consumer has suffered a seamless harm,” Wake stated. “The truth that [DOL] radically raised the wage necessities exacerbates the harm nevertheless it factors to the actual fact, extra importantly, that there are not any limits on the company. That is the nondelegation drawback.”
