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Trump’s DOL Reply Brief to the Fifth Circuit Defends Authority, But Not Obama Overtime Rule

07.28.2017

Many business owners and human resources professionals have been waiting (perhaps not so patiently) to understand how the Trump Administration would address the regulations implemented last year that would substantially increase the salary level for the customary “white collar” exemptions to minimum wage and overtime requirements of the Fair Labor Standards Act (“FLSA”). On June 30, 2017, the U.S. Department of Labor (“DOL”) filed its highly anticipated brief revealing the Trump Administration’s position on the ongoing litigation concerning the regulations.

As summarized in previous NewsFlash updates, the new regulations would have increased the minimum salary level for exempt employees from $455 per week to $913 per week, but were blocked by a preliminary injunction from a U.S. District Court shortly before they were to take effect last November. In issuing the injunction to block the regulations, the judge found that the DOL exceeded its authority by increasing the minimum salary level requirement. The DOL appealed the injunction shortly before President Obama left office; however, President Trump took office before the DOL was able to file its reply brief. This resulted in the appeal being put “on hold” while the Trump Administration reviewed its position on the regulations and the lawsuit. The DOL finally filed its reply brief on June 30, 2017 and this brief affords some level of insight into the Trump Administration’s position.

In its reply brief, the DOL tries to walk a fine line. On one hand, the agency argues the District Court’s ruling went too far by suggesting that the DOL did not have authority to include any minimum salary requirement in its test for exempt status. On the other hand, the DOL said that it would not seek to reinstate the salary level identified in the proposed regulations. Specifically, the DOL asked that the Court of Appeals not address the “validity of the specific salary level set by the 2016 final rule,” stating that it has “decided not to advocate” for that level, and that it instead “intends to undertake further rulemaking to determine what the salary level should be.” Essentially, the DOL is requesting the Fifth Circuit to reverse the preliminary injunction, and approve its authority to set a salary level without ruling on the validity of the $913 salary level.

In arguing the DOL has authority to include a minimum salary level as part of the FLSA exemption tests, the reply brief emphasizes the fact that every federal circuit that has considered this issue has upheld the salary level test as a permissible component of the regulations governing employees. Further, the salary level tests have been used for the past 75 years. The DOL clarified that although it does intend to raise the overtime exemption threshold above the prior $455 per week level, it would not begin the process of determining the appropriate level while its power to set a salary level remains in question. We will need to wait and see.

Although the reply brief answers some outstanding questions, it leaves many unanswered, such as: What will the status of the 2016 regulations be before the new rules become effective? and At what level will the new salary basis be set? As changes occur, Koley Jessen’s Employment, Labor and Benefits practice group will be prepared to provide additional guidance to employers operating in this ever-shifting regulatory landscape.

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