With its 2024 Loper Bright decision, the U.S. Supreme Court rejected the long-standing doctrine of Chevron deference, under which courts deferred to federal agencies’ interpretation of a statute when the text was ambiguous. The decision is already affecting numerous federal regulations.
5th Circuit Considering Whether to Remand Trump OT Case
The U.S. 5th Circuit Court of Appeals has asked attorneys representing the Department of Labor (DOL) and Dairy Queen operator Robert Mayfield whether they should send the case on the Trump administration overtime rules back to the district court to consider after the Supreme Court’s decision in Loper Bright.
The appeals court had been considering Mayfield’s appeal over the dismissal of his lawsuit seeking to overturn the Trump administration’s updated overtime rule. The Trump administration had increased the salary basis test for exempt employees. Mayfield had argued the language of the Fair Labor Standards Act (FLSA) allowed the DOL to consider only an employee’s job duties in determining whether a job was exempt. So far, the parties have argued against sending the case back to the district court, saying the district court had already resolved any legal issues absent Chevron deference.
In the subsequent oral argument, the 5th Circuit told the DOL it needed to provide more substantial reasoning for how it determines workers’ overtime eligibility, saying just because it has set salary thresholds since 1940 doesn’t give it carte blanche. Mayfield is represented by the Pacific Legal Foundation, a public interest law firm that sues over what they consider to be government overreach.
Biden OT Rule Under Attack
In addition to the challenge to the Trump administration’s overtime rule at the 5th Circuit, businesses are also seeking to overturn the Biden administration’s updated overtime rule.
In a federal district court in Texas, businesses are seeking expedited summary judgment (dismissal without a trial), claiming the new salary basis is arbitrary and capricious and is “causing irreparable injury to hundreds of thousands of businesses.” The court already granted Texas a preliminary injunction as a result of Loper Bright.
Now that the lawsuits by Texas and the businesses have been combined, the businesses claim since they have “brought a materially identical claim” to Texas and the court should grant summary judgement because “Congress did not authorize DOL to define the [executive, administrative, and professional] exemptions based solely on salary thresholds that are not reasonably related to the job functions.”
The Association of Christian Schools filed suit in the Middle District of Tennessee claiming the new overtime rule oversteps the authority Congress gave the DOL under the FLSA and seeking an injunction to block the rule because it will otherwise be forced to divert resources from students to meet the new requirements.
5th Circuit Remands 401(k) Regulation
On the other hand, on July 18 the 5th Circuit sent a case on the Biden administration’s 401(k) investing back to the district court, asking only that it reconsider how Loper Bright might affect its prior decision. In its order, the appeals court says sending the 401(k) rule case back was its “normal (though not absolute) practice” when the Supreme Court precedent affects a case on appeal.
FTC Noncompete Ban Challenges
The federal district court for the Northern District of Texas ruled the Federal Trade Commission (FTC) lacked the necessary rulemaking power to ban noncompetes, but it stopped short of blocking the ban nationwide. The court plans to issue a final decision on August 30, just before the rule’s September 4 effective date.
Meanwhile, the federal district court for the Eastern District of Pennsylvania upheld the regulation. As neither decision considered Loper Bright, challenges to the FTC’s ability to issue the ban can be expected to continue. On August 19, 2024, the federal district court for the Middle District of Florida granted a request to stay (halt) the effective date of the rule and preliminarily enjoin its enforcement against Properties of the Villages because it had shown a substantial likelihood of success on the argument that the FTC’s rule violated the major questions doctrine.
Businesses Challenge DOL Independent Contractor Rule
In both Texas lawsuits against the independent contractor (IC) rule, the plaintiffs have cited Loper Bright, arguing the rule went beyond the agency’s authority. However, because the trucking company appealed the denial of its request for a temporary restraining order to halt the IC rule to the 5th Circuit, the court placed its lawsuit on hold. In the Coalition For Workforce Innovation lawsuit now combined with the Chamber of Commerce’s litigation, the DOL argued that the Supreme Court’s decision in Loper Bright didn’t apply and that the plaintiffs haven’t shown the rule causes them any harm.