In a recent edition of this Newsletter, I wrote about the end of Chevron Deference and its potential impact on employment law broadly. Less than five months since the U.S. Supreme Court issued its landmark decision in the case of Loper Bright Enterprises v. Raimondo, overturning Chevron, federal government agencies, and particularly, the Department of Labor (DOL), are already on the defensive.
As background, for many years, even prior to Chevron, courts agreed that government agencies should be permitted some deference to interpret the statutes they are charged to enforce. It was generally recognized that government agencies employed experts in their respective fields and that their interpretation of ambiguous statutes was aided by that expertise and therefore deserved, at least, respectful consideration. After all, agencies existed because Congress couldn’t feasibly legislate for every possible eventuality.
Loper Bright all but did away with this view and placed interpretation of government agency actions back squarely in the hands of the judiciary. This means any new rules or regulations promulgated by the DOL are subject to judicial scrutiny, and older regulations, perhaps thought to be safe, could potentially be struck down by the courts. Add to that the recent election result and an impending return to a Trump DOL, and the uncertainty already surrounding DOL rules and employment law in America is set to grow tenfold.
The clearest example of this can be found in the recent increase to the overtime salary threshold. Employees are exempt from the Fair Labor Standards Act’s minimum wage and overtime protections if they are employed in a bona fide executive, administrative, or professional capacity. To fall within the EAP exemption, an employee generally must be paid a salary equal to or above a specified weekly salary level (previously $684 per week) and primarily perform executive, administrative, or professional duties, as defined by DOL regulations. The DOL issued a final rule elevating that salary threshold.
Starting July 1, the threshold increased to $844 per week, and on Jan. 1, 2025, it is scheduled to increase again to $1,128 per week. Starting July 1, 2027, these earnings thresholds are scheduled to be updated every three years, so they keep pace with changes in worker salaries.
However, the salary threshold increases have been subject to furious attacks, inspired by the end of Chevron. There is a significant contingent of business leaders who believe the DOL does not have the power to institute a salary threshold at all. They’ve brought a series of lawsuits with varying results. Two cases were filed in the United States District Court of the Eastern District of Texas, State of Texas v. DOL filed on June 3, 2024, and Plano Chamber of Commerce, et al. v. DOL filed on May 24, 2024. A small software development and marketing firm, Flint Ave, LLC, also brought a lawsuit challenging the 2024 rule in the United States District Court for the Northern District of Texas on June 3, 2024. Additionally, Mayfield v. DOL, a lawsuit arguing that the Trump-era rule slightly increasing the FLSA’s salary threshold in 2019 to the current salary threshold, is invalid because the DOL does not have authority to consider a worker’s earnings when determining whether the employee is exempt from overtime.
Despite the fact that many expected the 5th Circuit to strike down the salary threshold completely, on Sept. 11, it ruled in Mayfield, giving the DOL the greenlight to continue using a worker’s salary as a factor in determining their eligibility for overtime pay. The court warned, however, that the agency doesn’t have unlimited authority in determining the salary threshold, opening the door for courts to rein in regulators even where a rule might be permissible.
That victory for the Biden administration, however, was short lived, when on November 15th, a federal judge in Texas permanently blocked the rule. U.S. District Judge Sean Jordan said it improperly based eligibility for overtime pay on workers’ wages rather than on their job duties. You can read more about that decision in another of our articles here.
Other DOL regulations are under threat as well. The DOL’s recent worker classification rule is facing multiple lawsuits alleging the regulation is illegal. Freelance writers, a trucking company, and groups representing construction, financial services, and tech companies have filed challenges in federal courts in Texas, Georgia, Tennessee, and Louisiana contending the new standard violates the Administrative Procedure Act and Fair Labor Standards Act.
Though the rule took effect as of March 11, 2024, challenges remain, and new ones could pop up, with plaintiffs emboldened by the end of Chevron. Beyond that, a new administration means virtually all policies enacted under the Biden Administration could be up for revision or slashed entirely. Ultimately, that means employers will need to pay even closer attention to the shifts in employment law as the New Year approaches, bringing with it a new administration and more post-Loper court decisions almost guaranteed to uproot the current landscape.
