A three-judge panel of the 5th Circuit Court of Appeals ruled Wednesday that the Labor Department has the authority to use workers’ salaries as a basis for determining white-collar exemptions for overtime pay.
Promulgating the minimum salary rule is “consistent with DOL’s statutorily conferred authority,” the court ruled.
The case challenged the government’s authority in setting that threshold in the Labor Department’s 2019 overtime rule, which raised the minimum salary requirement for executive, administrative and professional employee exemptions under the Fair Labor Standards Act.
“The Fifth Circuit’s ruling is limited to whether the DOL has the authority to include a minimum-salary requirement within the EAP Exemption. The Fifth Circuit does not address whether the DOL has the authority to raise the minimum salary threshold or whether the salary levels of the 2019 rule are valid — appellants did not raise those questions to the court,” according to Husch Blackwell attorneys Scott D. Meyers, Andrew J. Weissler and Sarah Hamill.
The Sept. 11 ruling bolsters the DOL’s position as it faces legal challenges to its 2024 update to the overtime rule, according to several attorney groups.
The legal challenges “argue that the DOL rule exceeds the agency’s statutory authority because under the new rule, employees’ EAP status turns on their salary, not their job duties,” Ogletree Deakins attorneys Keith E. Kopplin and Zachary V. Zagger wrote Thursday in an article for the National Law Review.
The recent update to the overtime rule, which went into effect July 1, increased the salary threshold necessary to exempt salaried EAP employees from federal overtime pay to the equivalent of an annual salary of $43,888. The threshold will increase again on Jan. 1, 2025, to $58,656. The annual salary threshold was $35,568 under the 2019 rule.
The court examined the case in light of the Supreme Court’s 6-3 decision in June in Loper Bright Enterprises v. Raimondo to overturn the Chevron doctrine, which held that US courts should give substantial deference to federal agency decisions.
“The Fifth Circuit examined whether the DOL should be afforded so-called Skidmore deference, which allows a court to determine the appropriate level of deference based on the agency’s support of its action,” according to Kopplin and Zagger.
Ultimately, the court found that deference does apply to the 2019 overtime rule, they said.
“Though the specific dollar value required has varied, DOL’s position that it has the authority to promulgate such a rule has been consistent. Furthermore, it began doing so immediately after the FLSA was passed,” Judge Jennifer Walker Elrod wrote in the decision.
