"Labor Lawyers Skeptical of States' Lawsuits Aimed at Overturning Federal Overtime Rules"

The Daily Journal, September 23, 2016

By Matthew Blake

California labor & employment lawyers are skeptical of two lawsuits filed by 21 states and business groups, respectively, to overturn the Obama administration Labor Department's overtime rules, but acknowledge the class actions could disrupt dramatic changes in overtime pay.

"Everyone has been anticipating a lawsuit like this and on the plaintiffs' side, I do not think we are worried that it will succeed," said Bryan Schwartz, a plaintiff-side employment lawyer at Bryan Schwartz Law. "The DOL dotted the I's and crossed the T's on these regulations."

David A. Rosenfeld, a labor lawyer at Weinberg Roger & Rosenfeld APC, argued that the lawsuits are political gamesmanship, attacking the scope of a Fair Labor Standards Act that only Republican officials and business groups oppose.

Rosenfeld noted that the 5th U.S. Circuit Court of Appeals has appellate review power over the lawsuits, which were filed in Texas federal court, and that the 5th Circuit overturned Obama rules on immigration and employment.

"The 5th Circuit has been shown to be the most conservative," Rosenfeld said. "It's the only [circuit] where this could gain any traction."

U.S. Secretary of Labor Thomas E. Perez announced in May an increase in the threshold of which salaried employees get overtime pay from $23,660 to $47,476 a year.

Since the 1938 rollout of the Fair Labor Standards Act, the minimum salary level for overtime has been raised seven times via executive action, including during the George W. Bush administration.

But the lawsuit filed by the U.S. Chamber of Commerce and more than 50 other business groups states that doubling the overtime floor is "fundamentally departing from Congressional intent and decades of regulatory policy." Plano Chamber of Commerce et. al v. Perez et. al, CV16-732 (Sept. 20, E.D. Texas).

As plaintiffs noted in their complaint, Congress has legislated that administrative, managerial, and professional employees can be exempt from overtime.

In the Chamber's complaint and almost equivalent litigation by 16 state attorneys general and five governors, all Republicans, the plaintiffs contend that by doubling the floor, many of these employees will get paid overtime. States of Nevada et al. v. United States Department of Labor et. al, 16-CV731 (E.D. Texas, filed Sept. 20).

"The Department's new salary threshold is so high that it no longer is a plausible proxy for the categories exempted by Congress," reads the business group complaint, written by Robert F. Friedman, a Dallas-based Littler Mendelson PC lawyer.

Also, the complaint dings the Department of Labor for overreaching with automatic threshold hikes, the lack of a phase-in period for rules scheduled to launch in December, and an arbitrary reading of what income counts as salary.

The lead lawyer in the state lawsuit was Nevada Attorney General Lawrence Van Dyke.

Van Dyke told the Daily Journal Wednesday that the lawsuits were filed separately because the Republican AGs and business groups were not in coordination until at the very end, and said the cases may well be consolidated.

Van Dyke said the case was filed in the Eastern District of Texas because it has a reputation as a "rocket docket" and could get heard before December. Asked why he waited three months after the rules were announced to sue, Van Dyke claimed many states initially tried to make the rules work for their economies only to realize such efforts were futile.

Perez released a statement that the overtime rule adhered to a "comprehensive, inclusive rule-making process."

"We are confident in the legality of all aspects of our final overtime rule," the labor secretary said.

matthew_blake@dailyjournal.com