Employers have been following legal challenges to the U.S. Department of Labor’s second round of increases to the minimum salary that must be paid to meet the requirements of the Fair Labor Standards Act’s white collar overtime and minimum wage exemptions. Those increases (from $455 to $684 per week) are set to take effect January 1 unless blocked by federal courts. Last week, the Fifth Circuit Court of Appeals rejected a frontal challenge to DOL’s ability to require a minimum salary in the first place.
In Mayfield v. USDOL, the plaintiffs contended that Congress never delegated authority to set a minimum salary as a condition of the statutory minimum wage and overtime exemptions. They claimed that this issue fell under the Supreme Court’s recent major questions doctrine, and that federal courts should not defer to DOL’s interpretation of the statutory exemptions.
The Fifth Circuit rejected this reasoning, first concluding that the economic impact from the FLSA’s salary test was not significant enough to fall under the major questions doctrine. Noting that the salary test has been in place since 1938, the court stated that salary is a reasonable proxy for distinguishing between higher level exempt jobs and those that require overtime pay. If Congress disagrees with DOL’s use of the salary test, it has had over 80 years to amend the FLSA yet has not chosen to do so.
Given that the Fifth Circuit is among the most conservative federal appellate courts, this decision may signal the end of attempts to circumvent the salary rule. DOL is currently litigating another case involving the actual increases to the salary threshold and whether the amount of those increases is permissible under federal law. The next set of increases is set to occur on January 1, 2025. If legal challenges to the January 1 increase succeed, they will be based on the magnitude of that increase and not on the underlying ability of DOL to set a minimum salary as a condition of meeting the exemption.
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