Federal judges questioned Wednesday whether or not the U.S. Division of Labor’s wage foundation check for figuring out extra time pay eligibility underneath the Honest Labor Requirements Act exceeds the statutory authority delegated to the company by Congress.
Throughout oral arguments earlier than the fifth U.S. Circuit Courtroom 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 think about 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 Choose Cory Wilson.
Dixon stated that as a result of the FLSA’s statute specifies that the legislation’s exemption is “outlined and delimited” by division laws, DOL might incorporate a wage foundation check as a part of its inquiry. She stated this stance was upheld partly by the tenth Circuit’s 1944 resolution in Walling v. Yeakley.
“[Yeakley] seemed precisely to those phrases, ‘outline’ and ‘delimit,’ and it acknowledged not solely does the Secretary have the authority to outline these phrases, but in addition [to] delimit — to maneuver from the overall to the extra particular, to attract traces on this space,” Dixon stated. “And Congress anticipated that.”
She additionally cited the U.S. Supreme Courtroom’s 2007 resolution in Lengthy Island Care at Dwelling, Ltd. v. Coke. Within the case, which involved a special 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 overall statutory phrases,” Dixon stated.
Responding to that line of argument, Choose Jennifer Walker Elrod stated that Congress has explicitly talked about wage necessities and calculate them when amending the FLSA. One current 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 basically cuts towards you that once they wished to do minimal salaries, [Congress said] we are able to 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 really helps DOL’s authority to set a wage foundation check, as a result of “Congress has by no means disturbed the division’s strategy, and the truth that Congress amended the FLSA towards 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 Courtroom 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 resolution ending Chevron deference in help 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 partly 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 12 months, holding that such a check met the framework for company deference articulated by the Supreme Courtroom in Chevron v. Pure Assets Protection Council and was not foreclosed by canons of statutory building.
The Supreme Courtroom has since overruled Chevron, holding within the landmark June resolution Loper Shiny Enterprises v. Raimondo that courts should train impartial judgment in deciding whether or not an company has acted inside its statutory authority, quite than deferring to cheap company interpretations of ambiguous statutes.
Loper Shiny shook the authorized panorama, attorneys have since informed 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 an ordinary of evaluation that exhibits 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 evident 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 informed Wake.
Wake cited the 2018 Supreme Courtroom resolution in Encino Motorcars, LLC v. Navarro, et. al., which he stated “emphasizes that […] you don’t put a thumb on the dimensions of decoding the FLSA exemptions to attain any particular function. It’s a must 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 ought to be known as into query.
“We expect 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 attempting 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 legislation’s provisions are so broad as to be unconstitutional. Particularly, the judges cited the nondelegation doctrine, which limits Congress’ capacity to cede legislative energy to different entities.
“If outline and delimit is capacious sufficient to incorporate this minimal wage rule underneath this exemption, don’t we have now a nondelegation drawback?” Wilson stated. “Is it defensible that the company can do no matter it desires to?”
Dixon denied that DOL claims it may set any wage degree and stated that the FLSA as a substitute guides the company in setting a wage degree simply as a lot because it guides the setting of a duties check. She additionally famous that DOL’s consideration of knowledge 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 sort of delegation that the Supreme Courtroom 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. Courtroom of Appeals Constructing, location of the fifth U.S. Circuit Courtroom 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 Pictures
Choose says nixing check may 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 truth may present purpose to grant deference to DOL in accordance with the Supreme Courtroom’s 1944 precedent set in Skidmore v. Swift & Co., wherein the court docket stated judges may look to sure company interpretations and opinions for steerage.
“Congress has amended the FLSA many occasions. They’ve by no means touched the minimal wage rule,” Wilson stated. “So that you’ve received one thing you’re asking us to upend that’s [86] years previous.”
Wake stated the company’s long-standing interpretation of the FLSA as permitting for using a wage foundation check doesn’t entitle it to deference underneath Skidmore as a result of DOL’s interpretation isn’t persuasive. He stated the Supreme Courtroom rejected an identical interpretative strategy towards the FLSA in its 1944 Addison v. Holly Hill Fruit Merchandise, Inc. resolution, 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 form of screening mechanism to get on the form of workers who’re really performing the suitable duties. However minimal wage guidelines are usually not an alternative choice to analyzing the workers’ duties.”
However Wilson famous that the FLSA’s exemption additionally doesn’t point out the time period “duties” and as a substitute refers solely as to if workers work in an govt, administrative or skilled “capability.”
The court docket additionally thought-about the proposition {that a} ruling in favor of the Mayfield plaintiffs would create a circuit break up on the difficulty; “You’d put us in a precarious place, wouldn’t you?” Elrod requested Wake.
Wake responded that whereas such a call would create a circuit break up, the difficulty is well timed provided that DOL not too long ago printed a ultimate rule that raised the minimal wage threshold for extra time eligibility. The identical rule would implement one more enhance starting January 2025 and would mechanically enhance the brink each three years thereafter.
“Our consumer has suffered a seamless damage,” Wake stated. “The truth that [DOL] radically raised the wage necessities exacerbates the damage but it surely factors to the very fact, extra importantly, that there aren’t any limits on the company. That is the nondelegation drawback.”
