Earlier today, the U.S. Department of Labor filed a reply brief in further support of its appeal of the November 22, 2016 order in State of Nevada v. United States Dep’t of Labor, No. 4:16-CV-00731 (E.D. Tex.).  That order, issued by federal district judge Judge Amos L. Mazzant, enjoined the DOL’s 2016 overtime rule on a nationwide basis.  The new rule–revising 29 C.F.R. Part 541 and raising the minimum salary for exemption as an executive, administrative, or professional employees to $913 per week, or $47,476 per year–was scheduled to take effect on December 1, 2016.

Last December, the lame-duck DOL filed an appeal with the Fifth Circuit, seeking a lift of the injunction.  Many expected the DOL—following the change in administration in Washington in January 2017—to withdraw the appeal, allowing the injunction to stand.  But one issue with the injunction order is that it suggests that DOL has no authority to set any minimum salary for exemption.  If this reasoning is to stand, then even the current (i.e., pre-2016) version of the overtime rule would be invalid.  As Proskauer noted in comments to The New York Times last November, “The Labor Department has been setting these [salary] minimums [for exemption] since 1940 … This [injunction order] is the first time that a district court judge is essentially saying you don’t have the authority to do that.”

Regardless of what happens on the appeal, the version of the overtime rule that was enjoined will not survive.  Earlier this week, the DOL began the process of formally considering a new rule, by transmitting a Request for Information (RFI) to the White House’s Office of Management and Budget for review.  Once approved by OMB, the RFI–which seeks public comment on a number of issues relating to the so-called “white collar” overtime exemptions–will be published in the Federal Register.  Ostensibly, the responses to the RFI will, in time, inform the drafting of proposed revisions to Part 541.  Based on comments made by Secretary Acosta during his confirmation hearings and since, it is possible that a new overtime rule will raise the minimum salary for many exemptions to the low $30,000 range–not nearly as drastic or sudden an increase as that proposed by the Obama DOL.

The DOL explained its rationale in filing a reply brief, and the relief it seeks from the Fifth Circuit, as follows:

The Department has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be. Accordingly, the Department requests that this Court address only the threshold legal question of the Department’s statutory authority to set a salary level, without addressing the specific salary level set by the 2016 final rule. In light of this litigation contesting the Department’s authority to establish any salary level test, the Department has decided not to proceed immediately with issuance of a notice of proposed rulemaking to address the appropriate salary level. The rulemaking process imposes significant burdens on both the promulgating agency and the public, and the Department is reluctant to issue a proposal predicated on its authority to establish a salary level test while this litigation remains pending. Instead, the Department soon will publish a request for information seeking public input on several questions that will aid in the development of a proposal…..  For the foregoing reasons, the Department requests that this Court reverse the judgment of the district court because it was premised on an erroneous legal conclusion, and reaffirm the Department’s statutory authority to establish a salary level test. The Department requests that this Court not address the validity of the specific salary level set by the 2016 final rule ($913 per week), which the Department intends to revisit through new rulemaking.

Stay tuned for further developments on this very interesting issue.

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Photo of Allan Bloom Allan Bloom

Allan S. Bloom is a nationally recognized trial lawyer and advisor who represents management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended a number of the world’s leading companies against claims for unpaid wages…

Allan S. Bloom is a nationally recognized trial lawyer and advisor who represents management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended a number of the world’s leading companies against claims for unpaid wages, employment discrimination, breach of contract and wrongful discharge, both at the trial and appellate court levels as well as in arbitration. He has secured complete defense verdicts for clients in front of juries, as well as injunctions to protect clients’ confidential information and assets.

As the leader of Proskauer’s Wage and Hour Practice Group, Allan has been a strategic partner to a number of Fortune 500 companies to help them avoid, minimize and manage exposure to wage and hour-related risk. Allan’s views on wage and hour issues have been featured in The New York TimesReutersBloomberg and Fortune, among other leading publications. His class-action defense work for clients has saved hundreds of millions of dollars in potential damages.

Allan is regularly called on to advise boards of directors and senior leadership on highly sensitive matters such as executive transitions, internal investigations and strategic workforce planning. He also has particular expertise in the financial services industry, where he has litigated and arbitrated cases, including at FINRA and its predecessors, for more than 20 years.
A prolific author and speaker, Allan was the Editor of the New York State Bar Association’s Labor and Employment Law Journal from 2012 to 2017. He has served as an author, editor and contributor to a number of leading treatises in the field of employment law, including ADR in Employment Law (ABA/Bloomberg BNA, Senior Editor), Employment Discrimination Law (ABA/Bloomberg BNA, Final Proof Editor), Cutting Edge Advances in Resolving Workplace Disputes (Cornell University/CPR, Editor), The Employment Law Review (Law Business Research, U.S. Chapter Author), and The Complete Compliance and Ethics Manual (SCCE, Chapter Author).

Allan is a member of the NYSBA’s House of Delegates, sits on the Executive Committee of the NYSBA’s Labor and Employment Law Section, and is a Fellow of the College of Labor and Employment Lawyers. He has been recognized as a leading practitioner by Chambers since 2011.

Photo of Rachel Philion Rachel Philion

Rachel S. Philion is a partner in the Labor & Employment Law Department, co-head of the Wage and Hour Practice Group and a member of the Employment Litigation & Arbitration and Class and Collective Actions Practice Groups.

Rachel represents management across all industries…

Rachel S. Philion is a partner in the Labor & Employment Law Department, co-head of the Wage and Hour Practice Group and a member of the Employment Litigation & Arbitration and Class and Collective Actions Practice Groups.

Rachel represents management across all industries in a broad array of employment matters, including wage-and-hour, discrimination, harassment, retaliation, as well as whistleblowing, wrongful discharge and breach of contract disputes.  In addition to jury trial experience, she has extensive experience litigating nationwide class and collective actions.

In addition to Rachel’s active employment litigation practice, she regularly advises clients on litigation avoidance strategies and compliance issues, conducts wage and hour audits and leads workplace investigations.

Rachel was selected as a “Rising Star” by The Legal 500 for 2019 and New York Super Lawyers for 2017-2019.  She is a current member of the Committee on Labor and Employment Law of the New York City Bar Association, and a past member of the Executive Committee of the Labor and Employment Law Section of the New York State Bar Association and former co-chair of the Section’s New Lawyers’ Committee.