A U.S. appeals court on Wednesday upheld the U.S. Department of Labor's decades-old practice of using workers' salaries to determine whether they are eligible for overtime pay, rejecting a challenge by a fast-food franchise operator.
"Distinctions based on salary level are ... consistent with the FLSA’s broader structure, which sets out a series of salary protections for workers that common sense indicates are unnecessary for highly paid employees," Circuit Judge Jennifer Walker Elrod wrote for the court.
The 5th Circuit joined the four other federal appeals courts that considered the issue in cases from the 1940s and 1980s.
The U.S. Department of Justice, which represents the Labor Department, did not immediately respond to a request for comment.
Frank Garrison of the Pacific Legal Foundation, a libertarian group which represents Mayfield, in a statement said he was disappointed that the court upheld "a clearly unconstitutional rule that goes beyond the powers Congress granted the Department of Labor."
The FLSA 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.
Mayfield had sued the Labor Department in 2022 after it adopted a rule in 2019 raising the threshold to about $35,500. His lawsuit only challenges the ability of the department to use a salary test, and not the rule itself.
The Biden administration last year raised the threshold to about $58,600, extending overtime pay to an estimated 4 million U.S. workers. A federal judge in Texas in June blocked the rule from being applied to Texas state employees in a challenge by the Republican-led state.
U.S. District Judge Robert Pitman in Austin dismissed Mayfield's case last year, saying the FLSA gave the department broad authority to determine how the exemption should be applied.
Mayfield appealed and the 5th Circuit on Wednesday affirmed.
The panel noted that the U.S. Supreme Court in June eliminated the requirement known as Chevron deference that courts defer to agencies' interpretations of ambiguous laws they enforce. But even without that deference, the department's interpretation of the overtime exemption was the best reading of the FLSA, the court said.
The 5th Circuit also rejected Mayfield's claim that eligibility for overtime pay is a "major question" of economic and political significance that can only be addressed by Congress.
The 2019 rule affected a relatively small percentage of U.S. workers and its economic impact can be measured in hundreds of millions rather than billions of dollars, wrote Elrod, an appointee of Republican former President George W. Bush.
The panel included Circuit Judges Cory Wilson and Jacques Wiener, who respectively were appointed by Republican former Presidents Donald Trump and George H.W. Bush.
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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