Appeal of DOL Final Overtime Rule Won’t Be Heard Until At Least The Summer

The Fifth Circuit granted the government’s request for additional time to file its final reply brief in the pending appeal of a nationwide injunction issued by a Texas District Court Judge, blocking the DOL’s controversial overtime rule raising the required salary level for the white collar exemptions.  The final reply brief will not be filed until June 30, 2017, with oral argument likely scheduled sometime in the summer, unless additional requests for an extension are made.  The final brief was due on May 1, 2017, but the government requested an additional 60 days so the new administration could evaluate the case.  The government, prior to the election, had asked for expedited briefing, but now has made three requests to delay a ruling so the Trump administration can weigh in.  The additional 60 days will provide Alexander Acosta, who is expected to be confirmed as Secretary of Labor, time to determine what position it will take on the Obama overtime rule.  It will be one of the first major decisions the new Secretary of Labor will need to make.      

 

Government Seeks Another Delay on DOL’s Overtime Rule

The government has asked for another delay in submitting its final brief to the Fifth Circuit Court of Appeals regarding the DOL’s Final overtime rule, which raised the salary level for the white collar exemptions from $23,660 to $47,476.  The final reply brief was scheduled to be filed on May 1, 2017, after two earlier requests for an extension.  Now the government has asked for an additional 60 days, until June 30, 2017, to file the reply brief.  The motion notes the request is necessary “to allow incoming leadership personnel adequate time to consider the issues” and explains that the Secretary of Labor has yet to be confirmed.  It is expected the Fifth Circuit will grant the request, which was unopposed.  A vote on the Secretary of Labor nominee, Alexander Acosta, may be scheduled next week.  Once the Secretary is confirmed, the government will need to stake out its position regarding the Final Rule.  Please watch for developments here.

 

Federal Court In Illinois Rules Online Retailer Of Event Tickets Qualifies As “Retail Establishment” Under Section 207(i) Of The FLSA, Refusing to Defer to DOL Regulations

An online ticket broker that sells tickets to concerts, sporting events, and the theater qualifies as a “retail or service establishment” under Section 207(i) of the Fair Labor Standards Act (“FLSA”), Judge John Lee of the United States District Court for the Northern District of Illinois held. Blahnik v. Box Office Ticket Sales, LLC, 2017 U.S. Dist. LEXIS 45158 (N.D. Ill. Mar. 28, 2017).

Plaintiffs were sales representatives employed by Box Office Ticket Sales, LLC (“BOTS”) who alleged they were denied overtime pay. BOTS and the other defendants argued that the plaintiffs were not entitled to additional overtime wages under the FLSA since they qualified as commissioned employees of retail or service establishment under 29 U.S.C. § 207(i) of the FLSA.  For Section 207(i) to apply, three requirements must be met: (1) the employee must be employed by “a retail or service establishment;” (2) the employee’s regular rate of pay must exceed one and one half times the minimum wage; and (3) more than half of the employee’s compensation must come from commissions on goods or services sold.  29 U.S.C. § 207(i).  The only requirement at issue in Blahnik was the first requirement.

The court granted BOTS motion for summary judgment and held it qualified as a “retail or service establishment,” and in so doing, expressly addressed and rejected a regulation issued by the United Stated Department of Labor (“DOL”). The DOL regulation purportedly identifies establishments lacking a retail concept, 29 C.F.R. § 778.317, and lists travel agencies as one of the establishments lacking a retail concept.  Plaintiffs had argued that because BOTS was akin to a travel agency, the regulation precluded application of Section 207(i) to BOTS. But Judge Lee rejected the plaintiff’s reliance on the DOL regulation, noting that the Seventh Circuit Court of Appeals had previously found the list in the regulation to be “an incomplete, arbitrary, and essentially mindless catalog.” Other courts have also ignored the list, finding it arbitrary.

The court found BOTS acted as a retailer in selling tickets to customers (not a wholesaler) and thus qualified as a retail establishment notwithstanding the list of establishments in the DOL regulation.

This decision highlights that § 207(i) can apply to online retailers—a method of selling that did not exist when 7(i) was enacted. It remains important, as always, to confirm compliance with state law before implementing any wage-and-hour practice, whether relating to commission salespersons or otherwise.

Fifth Circuit Grants Request to Delay Appeal on Federal Overtime Rule

The appeal regarding the validity of the federal overtime rule will not be fully briefed until May 1, 2017, according to an order issued by the Fifth Circuit on February 22, 2017, granting an unopposed request by the Department of Justice for an extension.

When the Department of Labor first appealed the nationwide injunction issued by a Texas district court blocking the federal overtime regulation, it requested the Fifth Circuit to expedite the appeal.  But that was before the election.  Since the election, the Department of Justice (representing the DOL) has requested just the opposite.  In January 2017, the DOJ asked for an additional 30 days, until March 2, 2017, to submit its final brief in support of the appeal.  And on February 17, 2017, the DOJ asked for an additional 60 days, until May 1, 2017, to submit its final brief.  In a short unopposed motion, the DOJ requested the additional time “to allow incoming leadership personnel adequate time to consider the issues.”

The request may have resulted from the withdrawal of Andrew Puzder from consideration as Secretary of Labor.  The additional time will presumably allow Alexander Acosta, the current nominee for Secretary of Labor, to assess the government’s position on the appeal, if confirmed.

Meanwhile, back at the district court, a motion by the Texas AFL-CIO to intervene in the action is still pending, as is the motion for summary judgment filed in the case brought by various business groups, which was fully briefed on November 21, 2016, and which the State Plaintiffs moved to join.  The district court subsequently denied a motion to stay proceedings pending the appeal on January 3, 2017.  It is possible, therefore, the district court could issue a ruling on the summary judgment before the appeal is decided.

Philadelphia Mayor Signs into Law Legislation to Ban Inquiries into Wage History – Update

On January 23, 2017, Philadelphia Mayor Kenney signed the Wage History Ordinance into law, making Philadelphia the first major U.S. city to make it illegal for employers to inquire about a potential employee’s salary history. Employers have 120 days to comply as the bill will be effective as of May 23, 2017. As discussed here, the Philadelphia City Council passed the bill in December 2016, however, the City’s Law Department has spent the interim period analyzing concerns about the applicability and effect of the bill raised by both Philadelphia businesses and the City’s chamber of commerce. Despite challenges from the business community about the legality of the bill and potential First Amendment violations, Mayor Kenney, upon signing, conveyed his confidence in the City’s ability to defeat any challenges to the law and noted that the Philadelphia City Council passed it by unanimous vote.

 

NYSDOL Adopts Regulations Implementing State Law Limiting Employer’s Right to Restrict Employee Discussion Regarding Wages

In October 2015, New York amended its equal pay law making it unlawful for an employer to prohibit employees from inquiring about, discussing, or disclosing their wages or the wages of other employees.  N.Y. Lab. Law § 194(4).  The law reflects the belief that if employees can openly discuss their wages (including knowledge regarding the wages of co-workers performing similar work), the equal pay law would be more fully implemented.  “Policies adopted by employers that discourage or prohibit employees from sharing information about their earnings can contribute to unjust wage disparities going undetected,” according to the memorandum submitted in support of the law.

But not every employee wants his or her wages discussed among co-workers.  The law recognizes this, and permits employers to establish a written policy to set “reasonable workplace and workday limitations on the time, place and manner for inquiries,” including limitations on the ability of an employee from discussing or disclosing the wages of other employees without their “prior permission.”  The law also contains an exception for those employees who, based on their job functions, have access to the wages of other employees (e.g., Human Resources professionals).

NYSDOL regulations effective February 1, 2017 (published in the NYS Register the same day as the effective date) implement these provisions.  While largely parroting the statute, the regulations do explain that the law applies to all employees and explain that while an employer is permitted to issue a written policy prohibiting employees from discussing the wages of other employees without their prior permission, that “permission” means an “express, advance, authorization given voluntarily by the employee,” which need not be in writing.  Thus, although an employer may implement a written policy prohibiting employees from disclosing or discussing the wages of other employees without their prior permission, a co-worker may verbally provide such permission.

Employers should consider all applicable laws before implementing any written policy limiting employee discussion of wages as employees covered by the National Labor Relations Act already have the right to discuss terms and conditions of employment including wages for mutual aid and protection.

Fifth Circuit Grants Government Request for Additional Time to State Position on Overtime Rule

Before the election the Department of Labor asked the Fifth Circuit Court of Appeals to expedite its appeal regarding the validity of the DOL’s Final Rule, which increased the salary level for the white collar exemptions.  Earlier this week, however, following the inauguration of President Trump, the Department of Labor made the opposite request, asking the Court to slow down the process.  The DOL asked the Court for additional time to submit its reply brief, currently due January 31, 2017, “to allow incoming leadership personnel adequate time to consider the issues.”  The Fifth Circuit Court of Appeals granted that request on January 26, 2017, extending the due date for the reply brief to March 2, 2017.

The confirmation hearing for President Trump’s nominee for Secretary of Labor, Andrew Puzder, is currently scheduled for February 7.  Puzder will likely be questioned at the hearing about his intentions regarding the overtime rule.  He has previously expressed his disapproval of the regulation.

The DOL’s position on the rule may affect a separate motion filed by the Texas AFL-CIO to intervene in the action, filed due to fears the DOL will not defend the rule, which is still pending before the district court.   Stay tuned…

DOL Requests Additional Time to “Consider Issues” Before Filing Reply In Support of Salary Basis Rule

Earlier today, the Department of Labor filed an unopposed motion to extend the deadline for its next submission in support of its appeal of the salary basis rule injunction.  The motion for extension requested until March 2, 2017 to submit the Department’s reply brief to the Fifth Circuit, and expressly stated that the extra time is “necessary to allow incoming leadership personnel adequate time to consider the issues.”  Stakeholders, including proposed intervenors AFL-CIO, have have expressed concern that President Trump’s nomination of Andrew Puzder for Labor Secretary reflects the administration’s clear intent to quash the salary basis initiative commenced in 2014 by President Obama.  The extension request came even as centrist republicans — including Health, Education, Labor and Pensions Committee member Susan Collins — fielded questions regarding Puzder’s nomination.  Watch this space for further coverage of the appeal handling, and the new administration’s other labor initiatives.

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