With leaves falling, temperatures dropping, and Thanksgiving less than a day away, Americans are rapidly gearing up for the 2016 Holiday Season—the magical time between Black Friday and New Year’s when retailers kick into high gear, homes and storefronts are decorated to the nines, radio playlists take on a different tune, and we all eat with impunity. This year’s holiday season also marks a time for reflection and prediction, as legal commentators (and just about everyone else) contemplate the many changes the incoming presidential administration might bring.
But before preparing for the 2017 inauguration, writing New Year’s resolutions, or even wrapping holiday presents, we at HR Legalist urge our readers to step back and ponder several recent defense-friendly wage and hour developments that employers can be thankful for.
New Overtime Rules Blocked
In May, the Department of Labor announced its plan to double the minimum salary threshold for white-collar overtime pay exemptions from $455 per week ($23,660 per year) to $913 per week ($47,476 per year), starting December 1st. We reported that the change would affect around four million employees and that employers would be faced with tough choices for workers with earnings between the old and new thresholds.
Twenty-one states and various business coalitions sued the agency, claiming that the DOL overstepped its authority. As we reported today, one of these challenges proved successful yesterday in the Lonestar State. There, Eastern Texas federal district court judge Amos L. Mazzant granted a nationwide preliminary injunction that will prevent the DOL from implementing the new overtime rules as planned, reasoning that Congress never authorized the DOL to drastically raise the overtime salary threshold.
While the DOL may challenge Judge Mazzant’s ruling on appeal, it could take months before the case reaches an appellate panel, and the Fifth Circuit Court of Appeals is known for its conservative bent. Whether employers opt to place their revised wage and hour regimens on hold or proceed with salary and overtime changes as planned, they may declare Judge Mazzant’s ruling a victory—albeit tentative and potentially reversible.
Persuader Rule Enjoined Nationwide
Last March, the DOL unveiled the controversial “Persuader Rule,” which amended the Labor Management and Reporting Disclosure Act by requiring employers to disclose all agreements with outside consultants, or “persuaders,” hired to dissuade employees from union organizational activity. The Rule was designed to close loopholes by eliminating the “advice exemption,” a safe harbor that spared employers from reporting requirements as long as persuaders did not directly contact employees.
However, because “persuader” activity covers all advice and counseling, the Rule arguably chilled free speech and intruded on attorney-client privilege. We have previously reported that for these and other reasons, Northern Texas federal district court judge Sam R. Cummings entered a nationwide preliminary injunction preventing the DOL from enforcing the rule—just several days before it was slated to go into effect on July 1st.
That same judge has since entered a permanent order declaring the rule unlawful. While the DOL may appeal Judge Cummings’ order to the Fifth Circuit, legal commentators doubt that the appeal will be heard before the change in presidential administration and predict President-Elect Trump will let the injunction stand.
Either way, employers can rest assured that their right to counteract union organizational activity cannot so easily be curtailed.
Overtime Exemptions Clawed Back
In Spring 2015, the Ninth Circuit Court of Appeals held that auto service advisors are entitled to overtime pay under the Fair Labor Standards Act, specifically finding in favor of five such advisors who sought overtime back pay for their 55-hour workweeks. The Court cited a rule within the DOL’s 2011 regulations that distinguished auto service advisors, who sell maintenance and repair services, from salespeople, who sell automobiles; mechanics, who provide maintenance and repair services; and parts department workers, who obtain, stock, and distribute automobile components.
As we reported back in June, the Supreme Court disagreed and held in a 6-2 opinion that the DOL rule was procedurally defective because it gave insufficient reasons for removing auto service advisors from overtime pay-exempt status, which auto dealerships had relied on since 1978.
It may be early to declare full victory for auto dealers, as it is unclear how the Ninth Circuit will decide the case on remand. Regardless, the Supreme Court has now set precedent for questioning whether other DOL regulations are arbitrary and capricious. Even if other rules within the 2011 regulations remain standing, the DOL will probably proceed more carefully in the future and take a more nuanced approach to its rulemaking.
Whether you’ll be carving into turkey, tofurky, or some other flora or fauna, we at HR Legalist hope you all enjoy this year’s holiday and give thanks to the defense-side labor relations and employment law bounty our courts and lawmakers have delivered us this year.
Alexander V. Batoff focuses his practice on counseling clients on federal and state employment laws and regulations and defending them in litigation. He may be reached at 215-665-3048 or firstname.lastname@example.org.