A U.S. appeals court panel on Wednesday sharply questioned both sides in a fast-food franchise operator's challenge to the U.S. Department of Labor's longstanding practice of using workers' salaries to determine whether they are eligible for overtime pay.
A three-judge 5th U.S. Circuit Court of Appeals panel in New Orleans heard oral arguments in a bid by Robert Mayfield, who owns fast food restaurants around Austin, Texas, to revive a lawsuit claiming Congress never authorized the Labor Department to use salaries as a proxy for whether workers have management duties.
Federal wage law exempts workers with "executive, administrative, or professional" duties from receiving overtime pay, and the Labor Department has set a minimum salary as the cutoff for the exemption since 1938. The Biden administration last year raised the threshold to about $58,600, extending overtime pay to an estimated 4 million U.S. workers.
Mayfield sued the Labor Department in 2022, after it adopted a rule in 2019 raising the threshold to about $35,500. U.S. District Judge Robert Pitman in Austin dismissed the case last September, saying the federal Fair Labor Standards Act gave the department the broad authority to "define and delimit" the overtime pay exemption.
Several appeals courts, including the 5th Circuit in a 1966 decision, have upheld the Labor Department's use of the salary test.
It was unclear how the 5th Circuit panel was leaning on Wednesday, as the judges suggested that there were merits to both sides of the argument.
U.S. Circuit Judge Cory Wilson, an appointee of Republican former President Donald Trump, told Courtney Dixon of the U.S. Department of Justice that there must be some limit on the Labor Department's means of deciding who is eligible for overtime pay.
But while questioning Mayfield's lawyer, Luke Wake of libertarian group Pacific Legal Foundation, Wilson also said that Congress was aware that the salary test has been in use for decades and has never moved to eliminate it.
"This is not just a rule from last year," Wilson said. "The basics of the rule, which you're arguing find no support in the statutory text, have been around for quite some time."
U.S. Circuit Judge Jennifer Walker Elrod pressed Dixon on whether the FLSA's focus on workers' duties foreclosed the Labor Department from relying on their pay.
"Why do you get to import something different when you already have a perfectly fine thing that's consistent with the statute?" Elrod, an appointee of Republican former President George W. Bush, said to Dixon.
Dixon replied that the FLSA merely exempts workers who perform in an executive, administrative, or professional capacity, and leaves the details to the Labor Department.
"It doesn't explicitly refer to duties any more than it refers to salary," she said.
The 5th Circuit panel also includes U.S. Circuit Judge Jacques Wiener, an appointee of Republican former President George H.W. Bush.
Wilson and Elrod also said they were considering remanding the case to Pitman, an appointee of Democratic former President Barack Obama, to reconsider his decision in light of the U.S. Supreme Court's June ruling in Loper Bright Enterprises v. Raimondo.
The justices in Loper Bright eliminated a 40-year-old doctrine known as Chevron deference that required courts to defer to agencies' interpretations of ambiguous laws that they enforce.
Dixon and Wake both told the 5th Circuit panel that a remand was unnecessary because Pitman did not rely on Chevron deference in ruling for the Labor Department.
The case is Mayfield v. U.S. Department of Labor, 5th U.S. Circuit Court of Appeals, No. 23-50724.
For Mayfield: Luke Wake of the Pacific Legal Foundation
For the Department of Labor: Courtney Dixon of the U.S. Department of Justice
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