On August 31, Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas issued his final ruling in State of Nevada et al. v. United States Department of Labor, et al. Judge Mazzant granted the Plaintiffs’ motion for summary judgment, holding that the Department of Labor exceeded the authority delegated to it by Congress by increasing the minimum salary for the Executive, Administrative, and Professional exemptions under the FLSA to $913 per week.
At this point, some readers may be scratching their heads and asking, “didn’t this already happen last November?” Yes and no. In November 2016, Judge Mazzant granted a preliminary injunction, halting the DOL from implementing the new rules until the court could hear the case and issue a final decision. This is now the final decision, and is basically consistent with the court’s prior ruling.
The Court’s reasoning is basically as follows:
Congress created an exemption to the FLSA’s overtime regulations for “bona fide executive, administrative, and professional employees.” In doing so, it defined the exemption according to job duties, not a minimum salary. Congress delegated authority to the DOL to define the exemptions from there, but that authority was limited to defining an exemption based on job duties. By increasing the minimum salary for exempt status to $913 per week, the DOL excluded a large number of employees whose job duties otherwise met the duties requirements for the executive, administrative, or professional exemptions from exempt status. That, the court held, exceeded the DOL’s authority under the statute.
Of course, that reasoning does beg the question: if the DOL lacked authority to set $913 as the minimum salary for exempt status, does the current minimum of $455 per week also conflict with the statute? No, says the Court:
The Department sets the minimum salary level as a floor to “screen the obviously nonexempt employees, making an analysis of duties in such cases unnecessary.” … Further, the Department acknowledges that in using this method, “[a]ny new figure recommended should also be somewhere near the lower end of the range of prevailing salaries for these employees.” … The use of a minimum salary level in this manner is consistent with Congress’s intent because salary serves as a defining characteristic when determining who, in good faith, performs actual executive, administrative, or professional capacity duties.
In other words, a minimum salary is fine on the low end, but $913 was too much, as was the provision for automatically increasing the minimum in later years.
This is essentially the ruling that the Trump Administration recently asked the 5th Circuit Court of Appeals to make in the DOL’s appeal from Judge Mazzant’s earlier preliminary injunction order.
So what now?
Since the new ruling essentially gives the current Department of Labor what it wanted, the Department is unlikely to appeal the ruling again. Likewise, the states and employer groups that brought the lawsuit are likely to declare victory and head home. The wild card remains the AFL-CIO, which filed a motion for leave to intervene in the case to defend the rules. The District Court did not previously rule on that motion, then denied it as moot in light of its summary judgment ruling. Whether the AFL-CIO will attempt to appeal remains to be seen. At least for the time being, this seems to be another nail in the coffin of the $913 minimum salary for exempt employees. However, the DOL may propose a more modest increase to the current minimum over the coming months.