Can Salary Be a Surrogate for FLSA Overtime Exemptions?

In determining which employees must be paid time-and-a-half for overtime, a United States employer is bound by the Fair Labor Standards Act (FLSA), which dates back to 1938. That statute, regarding FLSA overtime exemptions says that an employee who works in a “bona fide executive, administrative, or professional [EAP] capacity” is not eligible for overtime. 

Attorney Jeffrey W. Brecher, from the law firm Jackson Lewis, notes that the statute does not define those terms, but rather it gives the Department of Labor (DOL) authority for “defining and delimiting” them.

To do that, the DOL has made salary a surrogate for the stated EAP criteria and FLSA overtime exemptions, presumably on the assumption that employees above a certain salary level are not the kind of workers that the FLSA was intended to protect.

The actual cut-off dollar amount has risen with the times. Still, the Department of Labor has been using salary level as a surrogate for the stated EAP criteria for 80 years, a fact noted by one of the judges on the Fifth Circuit panel that recently heard oral arguments in a case challenging the salary test. 

During oral arguments, in what could be taken as a point in favor of the DOL’s salary test, one of the judges referenced the “persuasive deference” test established by the Skidmore precedent. Under Skidmore, Brecher explains, “the court can take into account that the rule has been in place for 80 years, undisturbed by any Congressional attempts to reject it in the ensuing decades, despite other amendments to the FLSA.” 

However, another member of the three-judge panel said, in what could be construed as a rejoinder: “The fact that something has been done a long time is not dispositive.”

Mayfield v. U.S. Department of Labor was brought during the Trump administration when the mandated salary was  $35,568. Since then, the cut-off amount has increased substantially, and it’s scheduled to increase again on January 1, 2025.

A decision in this case is likely before that date, according to Brecher. A finding that the DOL lacks the authority to impose a salary rule would constitute a circuit split, and the case at that point could well be headed for the Supreme Court, where, Brecher notes, “at least one Justice has questioned the DOL’s authority to impose the salary minimum.”