Paul DeCamp, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Washington, DC, office, was quoted in Law360 Employment Authority, in “5th Circuit Decision Hints at Salary Debates to Come,” by Daniela Porat. (Read the full version – subscription required.)
Following is an excerpt:
What constitutes a bona fide salary for overtime-exempt professionals continues to be a source for debate, and a recent Fifth Circuit decision affirms long-standing principles behind federal salary regulations while presaging future battles around whether those regulations are valid, attorneys say.
The Fair Labor Standards Act and its regulations around salary basis pay for workers exempt from overtime were front and center in Gentry v. Hamilton-Ryker IT Solutions. A Fifth Circuit panel found on May 24 that Hamilton-Ryker IT violated the FLSA by classifying workers as overtime-exempt but failing to dole out their pay on a salary basis — a requirement for exempt status. …
One noteworthy aspect of this case is that Hamilton-Ryker attempted to challenge the U.S. Department of Labor's authority to mandate the salary basis test, said Paul DeCamp, a former administrator for the DOL's Wage and Hour Division and member of management-side firm Epstein Becker Green.
That issue was raised by Justice Brett Kavanaugh during oral arguments and in his dissenting opinion in Helix. He questioned whether the DOL's salary regulations, which he described as "dubious," would survive if challenged as inconsistent with the FLSA's characterization of who constitutes an overtime-exempt executive.
Section 13(a)(1) of the FLSA states that the law's overtime protections do not apply to workers employed in a "bona fide executive, administrative, or professional capacity … as such terms are defined and delimited from time to time by regulations of the Secretary [of Labor]."
The Fifth Circuit declined to engage with that argument because it was raised only on appeal, but, DeCamp said, that argument will nevertheless be present in litigation moving forward.
"We continue to see echoes of the arguments that appeared in the dissent in Helix," he said. "What's clear is that at least under the current state of the law, employers need to think carefully before relying on something other than a true weekly salary to satisfy the highly compensated standard."
These salary regulations and the DOL's authority to promulgate them may, however, face viable constitutional challenges, DeCamp said, and Justice Kavanaugh's comments sparked renewed interest in that debate.
"I think we're getting ahead of ourselves to try to make strong predictions either way," he said, "but to me, at least, the problem with the executive, administrative and professional exemptions has always been, at its core, a nondelegation problem as opposed to any other kind of issue."
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