Jeffrey (Jeff) H. Ruzal, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s New York office, was quoted in Law360 Employment Authority, in “Spotlight on Salary Pay Prompts Debates on FLSA Purpose,” by Daniela Porat. (Read the full version – subscription required.)
Following is an excerpt:
Salaries are in the spotlight following a landmark U.S. Supreme Court decision upholding salary basis pay and as federal officials seek to alter the overtime threshold, sparking controversy about whether current salary rules align with what the Fair Labor Standards Act envisioned.
The Restoring Overtime Pay Act of 2023, introduced by Sen. Sherrod Brown, D-Ohio, and co-sponsors Sens. Chuck Schumer, D-N.Y., and Bernie Sanders, I-Vt., would increase the number of workers eligible for overtime by increasing the salary threshold for the white collar exemptions from $684 per week, or almost $36,000 per year, to $45,000 per year in 2023 and eventually $75,000 in 2026. …
The proposal "swings for the fences" and raises the same issues that felled the Obama-era final proposed rule to increase the salary threshold increase, said Jeff Ruzal, a member of management-side firm Epstein Becker & Green PC.
Back in August 2017, U.S. District Judge Amos Mazzant invalidated the Obama administration's rule expanding overtime protections, saying the DOL had "exceeded its authority and gone too far with the final rule" by pushing for a minimum salary increase from $455 per week, or $23,660 annually, to $913 per week, or $47,476.
"The department creates a final rule that makes overtime status depend predominantly on a minimum salary level, thereby supplanting an analysis of an employee's job duties," Judge Mazzant wrote.
The same thing would happen here, Ruzal said.
"What are they doing with respect to the duties test? Are they eliminating it altogether? Because this does not seem to reflect what Congress sought to achieve with the FLSA," he said. "I do think that where [the salary threshold] rests now or thereabouts is not unreasonable when considered in conjunction with the primary duties requirements."
Just focusing on the salary is a "mistaken analysis," but it will probably be the focus of this administration, Ruzal said, and the DOL's eventual proposed rule increasing the salary threshold will likely be challenged irrespective of the number.
"I suspect that part of the challenge will be a continuation of what Justice Kavanaugh had said in the Helix dissent and that there be a more holistic review of what the exempt criteria are," he said. "It's not limited to just salary and that everyone's forgetting that there's a very good reason why the duties test is there."
An approach that focuses simply on salary disregards congressional intent, and it's also not realistic, Ruzal said.
"There are very good practical reasons why the duties test should be considered as part of the critical elements of … qualifying for exemption," he said, "as opposed to just looking at a number across the board that would apply to everyone in America where there are different costs of living."
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