Overtime Ruling Is Wrong on the Precedent, as Well as the Facts

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By Ross Eisenbrey, Economic Policy Institute

Judge Amos Mazzant, the judge who blocked enforcement of the Department of Labor’s new overtime rule, said many things that aren’t true in his opinion, including misstatements of historical fact such as when a minimum salary for exemption was first included in the regulations (it was right from the beginning, in 1938, not two years later). But Mazzant gets judicial precedent wrong, too.

The decisions of the 5th Circuit Court of Appeals control in Judge Mazzant’s Texas district. Importantly, the 5th Circuit ruled in 1966, in Wirtz v. Mississippi Publishers Corp, that the salary level test for exemption is rationally related to the determination of whether an employee is employed in a bona fide executive capacity. In a case against a publisher that claimed its executives were exempt even though it paid them less than the minimum salary for exemption, the Court of Appeals forcefully rejected the argument that the regulations are so ambiguous as to make the salary requirement arbitrary and capricious.

Appellees’ [the publisher’s] final contentions are that the regulations in question are so vague as to offer no guidance to employers who attempt to comply with the Act and that the minimum salary requirement is not a justifiable regulation under Section 13(a)(1) of the Act because not rationally related to the determination of whether an employee is employed in a ‘bona fide executive * * * capacity.’ These contentions lack merit. The Secretary’s regulations are clear. They simply require in this context that, in order to qualify for the executive exemption, the employer must pay his district advisers at least $100 weekly over and above any employment-connected cost to them of the tools, i.e., automobiles, required for their work.

The Appellees’ attack, coming as it does so long after the passage of the Act and challenging the validity of the regulation tends to underscore the need for injunctive relief to bring home to the employer his duties and obligations under the law. The statute gives the Secretary broad latitude to ‘define and delimit’ the meaning of the term ‘bona fide executive * * * capacity.’ We cannot say that the minimum salary requirement is arbitrary or capricious. Walling v. Yeakley, 140 F.2d 830 (10th Cir. 1944). See generally Craig v. Far West Engineering Co., 265 F.2d 251, 258-260 (9th Cir. 1959).

Despite this clear precedent, Judge Mazzant went off on his own and declared that there is no rational way to read a salary requirement into the Fair Labor Standard’s Act’s exemption for executive, administrative, and professional employees. His excuse for doing so is a claim that Wirtz “is distinguishable from this case” because it did not evaluate the lawfulness of a salary-level test under Chevron step one, as Wirtz preceded Chevron. There is, in fact, no question that Wirtz did evaluate the lawfulness of a salary-level test, found it lawful, and would have found it lawful under Chevron, as well. The 5th Circuit held that “The Secretary’s regulations are clear” and the court “cannot say that the minimum salary requirement is arbitrary or capricious.” Under Chevron, that is the end of the inquiry, and the Secretary’s regulation should not have been blocked.

Judge Mazzant has no authority to invalidate the overtime rule, and I hope that his error-ridden opinion and order will be rejected swiftly by the 5th Circuit Court of Appeals.

Originally posted here.

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