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<\/div>\n?An ongoing lawsuit in federal district court is challenging whether the U.S. Department of Labor (DOL) can apply a salary requirement for workers who are exempt from overtime. The DOL defended its use of the salary test in recent court filings.<\/p>\n
The lawsuit “seeks to invalidate the minimum salary threshold requirement of the Fair Labor Standards Act (FLSA) white-collar exemption regulations,” said James Coleman, an attorney with Constangy, Brooks, Smith & Prophete in Fairfax, Va. “While there would no doubt be appeals, and likely requests to stay any ruling pending appellate review, the implications for employers are enormous. If the court were to invalidate the minimum salary requirement, it would mean that exempt status under the FLSA white-collar exemptions could be determined without regard to how and at what level the employee is paid.”<\/p>\n
The case could be “far-reaching in its impact,” said Angella Myers, an attorney with Kaufman Dolowich Voluck in Dallas. “It will be a hotly contested issue.”<\/p>\n
Background<\/p>\n
For workers who are nonexempt, employers must pay 1.5 times the hourly rate for any hours worked above 40 hours in a week. Employees<\/a> are exempt from overtime if they earn at least $35,568 per year on a salary basis (or at least $684 per week) and perform executive, administrative or professional work. The DOL is expected to release proposed changes to the overtime rule<\/a> in May.<\/p>\n In August 2022, Robert Mayfield of Austin, Texas, sued the DOL, claiming it overstepped its authority when it raised the salary requirements for overtime exemptions to their current levels in 2019. Mayfield owns R.U.M. Enterprises, which has 350 workers and operates 13 Dairy Queen franchises, as well as Wally’s Burger Express, in the Austin area. <\/p>\n The lawsuit argues the DOL didn’t have the legal authority under the U.S. Constitution to set a minimum salary level for exempt employees. <\/p>\n The DOL’s “rigid salary level requirements impede R.U.M. from implementing its preferred compensation structure and therein reduces both company profits and management bonuses,” the lawsuit said. “R.U.M. was required to either pay higher starting salaries to all managers earning less than $684 per week or to convert them to a nonexempt status.”<\/p>\n Mayfield said he’s “worried about the federal government trying to run my business, instead of me. What I want is the freedom to run my own business. Sometimes we might like to promote somebody to management at $30,000, instead of $36,000.”<\/p>\n However, the DOL said Congress gave it the power to use a salary requirement in defining who works in an executive, administrative or professional capacity and is therefore\u2014if they satisfy the duties tests<\/a>\u2014not entitled to overtime pay. “The 2019 rule also comfortably withstands scrutiny on its own terms” because the salary test is lawful according to legal precedent, the DOL argued in its request for summary judgment filed with the U.S. District Court for the Western District of Texas on Feb. 10.<\/p>\n The DOL said the salary test “prevents the misclassification by employers of obviously nonexempt employees.” It noted that salary level “is a helpful indicator of the capacity in which an employee is employed, especially among lower-paid employees.”<\/p>\n Part of the reason the department has periodically raised the salary threshold is general wage inflation across the U.S. over time, Myers said. <\/p>\n The district court hasn’t issued a decision yet on the request for summary judgment. <\/p>\n Requirements for a White-Collar Exemption<\/p>\n To qualify for a white-collar exemption, an employee must satisfy a job duties test, be paid at or above the minimum salary and be paid on a salary basis. There are separate duties tests for different white-collar exemptions:<\/p>\n\n