By Mark Adams
When the United States Supreme Court issued its decisions in Loper Bright Enterprises v. Raimondo, many speculated that the decision would be used to strike down various agency regulations in the future. After all, the case had reversed the long-standing case precedent of Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc. (or “Chevron” for short) which had required courts to defer to the rulemaking authority of a federal agency unless a rule was contrary to clear congressional intent. Now, with courts being charged to exercise their own independent judgment in deciding whether an agency had acted properly, the stage was thought to have been set for employers to seek out pro-business courts to challenge rules that they may not like.
However, as also pointed out in our August Beacon, that does not necessarily mean that such challenges would automatically be successful either and a recent case illustrates that.
The case (Mayfield v. US Department of Labor), involved a challenge by a small-business owner in Texas to the United States Department of Labor’s minimum salary rule change back in 2019 which at that time had raised the minimum salary threshold from $455 per week to $684 per week. In challenging the rule, Mayfield did not argue that the particular salary threshold itself was invalid, but rather merely argued that the DOL’s exceeded its statutory authority by defining the Executive, Administrative and Professional (EAP) exemption(s) in terms of salary level at all. Ultimately, upon appeal, the U.S. Court of Appeals for the Fifth Circuit found Mayfield’s arguments unpersuasive and ruled in favor of the DOL.
What makes the decision to support the DOL’s statutory authority to develop a minimum salary rule eye-opening is two-fold. One, the decision refers to the Loper Bright decision in its opinion to render its own independent judgment on the issue. In rending its independent judgment, the Fifth Circuit concluded that setting a minimum salary level for the EAP exemption is within the DOL’s power to define and delimit the terms of that exemption. In reaching that outcome however, the court did note that “while the DOL can enact rules that clarify the meaning of those terms…..it cannot enact rules that replace or swallow the meaning those terms have.” Finding that the 2019 rule did the former and not the latter as far as their authority to set a minimum salary rule, the Fifth Circuit upheld the 2019 rule. Two, the Mayfield case was decided in the Fifth Circuit which is the same circuit that is currently entertaining a challenge to the DOL’s 2024 rule (that raised the salary threshold to $844/week effective July 1, 2024 and is set to raise to $1,128/week effective January 1, 2025) in one of circuit’s lower courts, specifically the case of Plano Chamber of Commerce v. Department of Labor which remains pending in the Eastern District of Texas.
So, the question remains: will the Mayfield decision be fatal to the efforts still underway to challenge the salary increase that took place in July and slated to increase on January 1st? Well, it certainly is not a positive development from an employer’s point of view to say the least. However, we will see if additional arguments to the specific salary amounts and methodology for reaching them cast the Plano case in a different light.
We will keep you posted on further developments, but as of now employers should continue to plan for the January 1st 2025 increase. As a reminder, EANE has a FLSA toolkit to help you in this regard. Members can find that toolkit in the Members Area of our website.