Rule of Law

Think Tank Says DOL Entitled To Revise OT Exemption Level

The U.S. Department of Labor doesn’t need direct congressional authorization to raise the minimum salary threshold for overtime exemption because such a policy change is neither unprecedented nor economically impactful, a progressive think tank told the Fifth Circuit.

The Constitutional Accountability Center argued in an amicus brief filed Thursday that the major questions doctrine, which establishes that federal agencies need congressional approval to enact extraordinarily impactful policy changes, should not be used to unwind a 2019 DOL rule raising the overtime exemption threshold for salaried employees.

The DOL has periodically recalculated the salary threshold since 1938, the group noted, and only a small fraction of American workers would be affected by even the most dramatic of threshold hikes.

“Neither the DOL’s 2019 rule, nor the use of a salary-level test in general, has the magnitude of economic and political significance required by precedent,” the CAC said. “The 2019 rule regulates the same employers in the same way that DOL has regulated for decades — it simply updates earnings data, reflecting recent changes in wages.”

The dispute stems from a 2019 rule raising the minimum weekly salary for overtime-exempt workers from$455 to $684. Dairy Queen franchisee Robert Mayfield is seeking to overturn a Texas federal court’sdecision to uphold the DOL rule, arguing that the recalculated exemption threshold is too economicallysignificant to be enacted without congressional authorization.

Citing the U.S. Supreme Court’s 2022 decision in West Virginia v. EPA, the CAC said courts may strike down agency actions under the major questions doctrine only when those agencies unveil radical new regulatory powers that go beyond what Congress could reasonably be understood to have authorized.

A revision to the salary-level test for overtime exemption was neither radical nor new, the think tank argued. The DOL implemented the first, $30-per-week salary threshold in 1938, the CAC noted, and the formula the DOL used to calculate the new exemption threshold was identical to the one used to calculate the old exemption threshold in 2004.

“Neither the DOL’s salary-level approach nor its latest earnings update is the type of unprecedented action with which the major questions doctrine is concerned,” the group said.

Nor was the 2019 rule economically burdensome enough to justify judicial intervention under the major questions doctrine, the CAC said. Where the national eviction moratorium struck down under the major power doctrine in 2021’s Alabama Association of Realtors v. HHS bore a price tag of roughly $50 billion, the CAC said a raised exemption threshold would potentially cost employers $173.3 million per year.

“A wage standard that might exclude 1.2 million workers from [overtime exemption] — a minuscule proportion of the 140 million workers subject to the [Fair Labor Standards Act] — lacks anything close to the economic impact in past major questions cases,” the CAC said.

Earlier this month, the DOL told the court that the 2019 rule fell well within the department’s long-standing authority to define which workers are subject to FLSA exemptions.

The CAC is represented in-house by Brianne Gorod, Elizabeth Wydra, Brian Frazelle and Jess Zalph.

Mayfield is represented by Luke A. Wake and Frank Garrison of the Pacific Legal Foundation.

The DOL is represented by Brian M. Boynton, Jennifer S. Brand, Rachel Goldberg, Steven W. Gardiner, Jamie Esparza, Alisa B. Klein and Courtney L. Dixon of the U.S. Department of Justice and in-house by Solicitor of Labor Seema Nanda.

The case is Mayfield et al. v. U.S. Department of Labor et al., case number 23-50724, in the U.S. Court of Appeals for the Fifth Circuit.