In 2010, the Department of Labor announced it would cease its “opinion letter” practice, wherein employers could submit written questions regarding application of the FLSA and its implementing regulations, and receive guidance. Replacing the opinion letter structure were “administrator interpretations,” wherein the Department would simply issue an advisory opinion on its own volition.  Contemporaneous with announcing this new practice, the Department issued its first Administrator’s Interpretation, and took the position that mortgage loan officers generally do not qualify for exemption from overtime under the administrative exemption. This Interpretation directly contradicted the Department’s prior analysis of the same issue (issued in the traditional opinion letter fashion) provided just four years previously. In response to this DOL action, the Mortgage Bankers Association filed suit challenging the DOL’s authority to change its position. Earlier this week, the Court of Appeals for the District of Columbia Circuit ruled that the DOL’s reversal violated the Administrative Procedure Act (APA), and thus the Administrator’s Interpretation is invalid. Mortgage Bankers Ass’n v. Harris, 2013 U.S. App. LEXIS 13470 (D.C. Cir. July 2, 2013).

The court’s opinion focused on a fairly technical legal question of administrative law (the answer to which, the court noted, can vary from jurisdiction to jurisdiction). Specifically, when does an agency’s position regarding statutory interpretation become binding on the agency, absent an announcement of intent to change position and the corresponding public “notice and comment” procedure provided for by the APA?  The parties’ dispute here concerned whether the test within the D.C. Circuit required only a definitive interpretation and subsequent reversal (as the Association urged), or whether, as the Department of Labor asserted, the party seeking to invalidate the change in position must show actual reliance on the prior interpretation.  The Court rejected the idea that actual reliance should be a prerequisite to invalidation, observing that the reliance requirement would make invalidation unavailable under the law in all but the most extreme cases, holding instead that reliance is useful in terms of demonstrating that the original position had in fact become definitive. Because the parties did not dispute that a definitive position had been taken and then reversed, the Court’s ruling as to the “reliance” requirement decided the case, and the Administrator’s Interpretation was vacated. 

Harris joins the Supreme Court’s decision in Christopher v. SmithKline Beecham a judicial rejection of the Department of Labor’s reversals (under the Obama administration) of many long-standing Department positions consistently asserted under prior administrations.  Given the Christopher opinion, it is unlikely the Department will seek review of this decision from the current Supreme Court.