Labor Law -- 2017

Plano Chamber of Commerce v. Perez   (E.D. Tex.)

Challenging DOL's new overtime rule

The Department of Labor’s (“DOL”) new overtime rule drastically alters minimum salary exemption thresholds —increasing the minimum by 100%, from $23,660 to $47,476 annually — imposing new overtime costs on businesses of all sizes, including those who employ millions of individuals who have historically been exempt from overtime. This effectively eliminated the statutory exemption for those employed in an executive, administrative, or professional capacity (the “EAP Exemption”) below the $47,476 threshold. The rule also includes an escalator provision automatically updating the minimum salary requirements to even higher levels every three years.

In 2016, the NAM sued DOL to block the rule, and a federal judge issued a nationwide injunction preventing implementation of the rule, finding that the DOL’s actions likely exceeded its statutory authority.

While the DOL appealed to the Fifth Circuit and sought to pause all further proceedings in the district court the AFL-CIO sought to intervene in the district court. We opposed the motion to stay the proceedings pending appeal, and the judge agreed.

On August 31, 2017, the judge ruled in our favor and granted summary judgment. The judge applied a two-pronged test when reviewing the DOL regulation, namely, (1) whether Congress has directly and unambiguously spoken to the precise issue at question and (2) if it hasn’t, whether the agency’s interpretation is based on a permissible construction of the statute. Congress satisfied the first prong of the test by expressly stating that a duty-based (not salary-based) determination qualifies individuals for the EAP exemption. After reaching this determination, the court found that the DOL’s new overtime rule violated its authority by contradicting the express will of Congress by eliminating the duty-based EAP exemption test in favor of a salary-based determination, making it unlawful. Additionally, in dictum, the court stated that even if Congress had failed to meet the first prong of the test, the DOL’s rule would still have failed because it was not based on a permissible construction of the statute.

Related Documents:
NAM Opposition Motion to Intervene  (December 15, 2016)
NAM Opposition Motion to Stay  (December 15, 2016)
NAM Reply Brief  (November 21, 2016)
NAM Response  (October 21, 2016)
NAM Motion to Consolidate  (October 17, 2016)
NAM Summary Judgment Brief  (October 14, 2016)
NAM Complaint  (September 20, 2016)
Press Release  (September 20, 2016)


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