By Pamela Wolf, J.D. Nevada, joined by 20 other states, has filed a lawsuit in Texas—undoubtedly perceived as friendly after the success of the recent litigation over immigration reform—challenging Department of Labor’s final overtime rules under the Tenth Amendment of the U.S. Constitution and the Administrative Procedure Act. Nevada Attorney General Adam Paul Laxalt led the coalition of states in filing the suit. In addition to arguments that the final rule contradicts the statutory text of the exemption, as well as Congressional intent, the complaint raises the specter of the federal executive depleting state budgets in an effort to impose its policy will on the states. And, the DOL is facing a second lawsuit challenging the lawfulness of its final overtime rule. Filed the same day as the complaint filed by 21 states, a second suit disputes the validity of the final rule under the Administrative Procedure act in a three-count complaint filed by the U.S. Chamber of Commerce, leading a broad coalition including the Texas Association of Business, National Automobile Dealers Association, the National Association of Manufacturers, National Association of Wholesaler Distributors, National Federation of Independent Business, National Retail Federation, and more than 50 other national and Texas business groups. The suit filed by the states raises similar APA challenges as well as Tenth Amendment questions. The final rule Salary floor raised. The final rule on the FLSA exemption for executive, administrative, professional, outside sales, and computer employees—the so-called "white collar" or "EAP" overtime exemption—made significant changes to the current rules. The regulation raises the floor below which overtime must be paid from $455 to $913 a week, or stated annually, from $23,660 to $47,476, as projected for 2016. Side-stepping the duties test. Instead of analyzing and permitting for notice and comment about the duties that employees actually perform in our modern economy, the complaint on behalf of the states alleges, the Labor Department "simply doubled the current ‘salary basis test’ that must be satisfied before an EAP employee is ineligible for overtime, and rendered virtually irrelevant any inquiry into whether an employee is actually working in an executive, administrative, or professional capacity." The plaintiffs criticize the DOL’s belief that salary level, not the type of work actually performed, ‘is the best single test of exempt status for white collar employees."’ Accordingly, under the guise of updating FLSA-related regulations, the Labor Department "disregarded the actual requirements of the statute and imposed a much-increased minimum salary threshold that applies without regard to whether an employee is actually performing ‘bona fide executive, administrative, or professional’ duties," according to the complaint. Proposed rule sought stakeholder input. When the DOL issued its proposed regulations, it sought input on the following questions for consideration in the final version of the regulations.
- What, if any, changes should be made to the duties tests?
- Should employees be required to spend a minimum amount of time performing work that is their primary duty in order to qualify for exemption? If so, what should that minimum amount be?
- Should the Department look to the State of California’s law (requiring that 50 percent of an employee’s time be spent exclusively on work that is the employee’s primary duty) as a model? Is some other threshold that is less than 50 percent of an employee’s time worked a better indicator of the realities of the workplace today?
- Does the single standard duties test for each exemption category appropriately distinguish between exempt and nonexempt employees? Should the Department reconsider our decision to eliminate the long/short duties tests structure?
- Is the concurrent duties regulation for executive employees (allowing the performance of both exempt and nonexempt duties concurrently) working appropriately or does it need to be modified to avoid sweeping nonexempt employees into the exemption? Alternatively, should there be a limitation on the amount of nonexempt work? To what extent are exempt lower-level executive employees performing nonexempt work?
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