On September 20, 2016, officials from Ohio and twenty other states filed a lawsuit in the Federal District Court for the Eastern District of Texas seeking an injunction and declaratory relief against the Department of Labor to halt implementation of new rules for overtime exempt “white collar” employees under the Fair Labor Standards Act. The suit bases its challenge both on constitutional principles of federalism via a 10th Amendment challenge as well as on statutory grounds that the Department of Labor overstepped its statutory authority in various respects.
The 10th Amendment states, “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the states are reserved to the states respectively, or the people.” This amendment generally stands for the truism that the federal government has limited power over state governments and has only been found to prevent actions by the federal government in a few cases where state legislatures or employees have been “commandeered” by federal legislation. Here, the Plaintiffs argue that the regulations would significantly restrict the way they may expend labor resources, which amounts to a large part of state budgets.
The Plaintiffs’ other claims argue various ways in which the Department of Labor exceeds its statutory authority in the new rules governing FLSA overtime exemptions for executive, administrative, and professional employees. This includes claims that the rules improperly use salary as a litmus test for exempt status, fail to go through necessary notice and comment procedures for future increases in the minimum salary, and represent arbitrary and capricious agency action in violation of the Administrative Procedures Act.
This complaint only marks the beginning of litigation, but the jurisdiction chosen by the Plaintiffs was strategic as it is often referred to as the “rocket docket” due to its (relatively) rapid litigation pace. This jurisdiction was also strategic as it is governed by the 5th Circuit Court of Appeals, considered the most conservative federal circuit in the country. Depending on the pace of litigation and how long the U.S. Supreme Court continues with only eight members, this challenge to DOL overtime rules may serve as a real hurdle to implementation.
FHKAD attorneys will continue to monitor this litigation and other matters relating to the DOL’s implementation of new overtime rules. Please feel free to contact us if you have any questions concerning these developments.