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DOL still lacks leader to decide what course to take in overtime case
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By again asking an appeals court for more time to file a brief in its effort to move forward with the Obama administration's new overtime regulations, it shows that the Department of Labor (DOL) lacks the appetite to carry on with litigation, at least not without new leadership, according to Jim Swartz, an attorney with Polsinelli in Atlanta.
And should Secretary of Labor nominee Alexander Acosta be confirmed, he said, the DOL might abandon its court battle to put the overtime rule in place.
"The overtime rule isn't dead, but it is on life support," Swartz said. "There remains some procedural wrangling to be resolved—both in the appeals and lower court."
The DOL's overtime rule would have raised the salary level for white-collar exemptions from $23,660 to $47,476 per year and increased this salary threshold automatically every three years. But 21 states, led by Nevada and Texas, filed an emergency motion to bar the rule, and the motion was preliminarily granted in November 2016. The DOL appealed that decision to the 5th U.S. Circuit Court of Appeals.
But the Justice Department has repeatedly asked for delays in filing a reply brief on behalf of the DOL. On April 14, the Justice Department asked the 5th Circuit if it could have until June 30 to file its brief, noting that a new labor secretary has yet to be confirmed.
The government's delay "signals that the DOL remains in transition," Swartz said.
"The DOL is obviously keeping its options open as it awaits the confirmation of a new secretary of labor, who may also prefer to await the appointments of a solicitor of labor and wage and hour administrator," said Robert Boonin, an attorney with Dykema in Detroit and Ann Arbor, Mich.
Challenge of the Injunction Is Possible
Conventional wisdom is that Trump's DOL will drop its court battle to proceed with the overtime rule, Boonin said. That would be a mistake, according to Boonin, who noted that the lower court held that the DOL did not have the authority to set any salary threshold for white-collar exemptions. That holding makes it unclear whether a court would uphold the current $23,660 salary threshold. And if the DOL abandons its defense of the overtime rule but drafts a new overtime rule, the court's ruling raises the question of whether any new salary threshold the department selects would withstand court challenges.
Even if the DOL decides not to continue its appeal of the lower court's temporary injunction, the litigation might continue. On Dec. 9, 2016, the Texas AFL-CIO moved to intervene in the lawsuit in case the DOL withdraws its defense of the rule, Swartz noted. No action has been taken on that petition, Boonin said.
"It's also possible that the 5th Circuit could appoint a lawyer to advocate for the dissolution of the injunction, so that the court could have the opportunity to fully explore all issues," said Steven Suflas, an attorney with Ballard Spahr in Denver and Cherry Hill, N.J.
While the federal government might stop challenging the preliminary injunction, Suflas said that would be "shortsighted." He explained, "The basis for the district court's opinion was that the Fair Labor Standards Act [FLSA] does not permit a salary-level component to the white-collar exemptions. Not only is that contrary to 80-plus years of DOL policy and enforcement, it would also mean that executive, administrative and professional employees could be paid at the minimum wage, provided that they meet a job duties test. This is such a radical change to DOL policies and procedures that the agency may need to continue to resist the nationwide injunction to ensure consistent enforcement of the FLSA."
[SHRM members-only HR Q&A: What types of compensation can an employer include in an exempt employee's salary to meet the FLSA minimum salary requirement?]
"Section 13(a)(1) of the FLSA is a minimum wage and overtime exemption. It is a travesty that even the Wage and Hour Division has chosen to publicize the revision to CFR [Code of Federal Regulations] Title 29, Part 541 as the 'overtime rule,' " said Karen Dulaney Smith, wage and hour consultant with KDS Consulting in Houston. "One of the main reasons for raising the salary level is that there are people with exempt duties working for less than the minimum wage because of the insufficient salary level. At $455 per week, an employee cannot work more than 62.76 hours per week and receive the minimum wage. There are many managers out there who work more than 63 hours a week."
More Clarity If Acosta Is Confirmed
"We will likely have definitive resolution after Acosta has been confirmed by the Senate and can finalize DOL's approach to the pending litigation," Swartz said.
Suflas predicted, "It is likely that the new administration will advocate for an increase in the white-collar salary level regardless of the injunction," though not at the $47,476 level. He noted that Acosta said in his confirmation hearing that there should be a new salary level of $33,000.
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