The U.S. Department of Labor (DOL) has filed an appeal with the Fifth Circuit of a District Court decision invalidating the rule increasing the FLSA salary basis threshold for administrative, executive, and professional employees. The Ninth Circuit has rejected the executive order and implementing regulations that increased the minimum wage for employees of federal contractors. The Labor Department proposed a rule phasing out the subminimum wage for workers with disabilities. OSHA has extended the comment period for the heat standard rule.

DOL Appeals FLSA Overtime Rule Invalidation – The U.S. Department of Labor (DOL) has appealed to the United States Court of Appeals for the Fifth Circuit, the decision by the District Court for the Eastern District of Texas invalidating the rule raising the salary basis threshold under the Fair Labor Standards Act (FLSA) for administrative, executive, and professional employees. In finding that the DOL exceeded the authority delegated to it by Congress, the court in the case of State of Texas et al. v. US Department of Labor stated the “2024 rule effectively eliminates consideration of whether an employee performs bona fide executive, administrative, or professional capacity duties in favor of what amounts to a salary-only test.” The DOL promulgated a rule that increased the FLSA salary basis threshold for administrative, executive, and professional employees from $35,568 per year to $43,888 per year effective on July 1^st and to $58,656 per year effective on January 1, 2025. When the rule was fully implemented, it was estimated that an additional 4 million workers would be entitled to overtime.

Appellate Court Invalidates Federal Contractor Minimum Wage Increase – The United States Court of Appeals for the Ninth Circuit ruled that the Executive Order increasing the minimum wage for employees of federal contractors and its implementing regulations violated the authority granted to the president and the Department of Labor (DOL) under the Federal Property and Administrative Services Act (FPASA). The Ninth Circuit also found in the case of State of Nebraska v. Julie Su that in issuing the rule implementing the executive order, DOL was acting arbitrarily or capriciously in violation of the Administrative Procedure Act (APA) for failing to consider alternatives to the $15/hour minimum wage mandate.

Five states filed this lawsuit challenging enforcement of the minimum wage mandate. The District Court dismissed the complaint resulting in this appeal. The FPASA was enacted in 1949 to provide the federal government with “an economical and efficient system for procuring and supplying property and nonpersonal services and performing related functions including contracting.” The Ninth Circuit believed that DOL’s rule did not “serve the interests of economy and efficiency.” DOL acknowledged that the rule would cost federal contractors $1.7 billion that would likely be passed onto the government. Any predicted increases in productivity or reductions in turnover would, according to the Ninth Circuit, only help offset the costs of the rule but the overall costs would increase.

The Ninth Circuit stated that the APA required DOL to consider alternatives to the $15/hour minimum wage mandate, which it failed to do. The Ninth Circuit concluded that the executive order and implementing regulations “exceeded the authority Congress granted the Executive Branch under the FPASA and that the implementing regulations are arbitrary and capricious under the APA.”

DOL Proposes Rule Phasing Out Subminimum Wages for Workers with Disabilities – The U.S. Department of Labor (DOL) issued a proposed rule that would phase out certificates allowing payment of less than the minimum wage to workers with disabilities. Under Section 14(c) of the Fair Labor Standards Act (FLSA), employers can apply for certificates to pay subminimum wages for work being performed on contracts subject to the McNamara-O’Hara Service Contract and the Walsh-Healy Public Contracts Act. The proposed rule would discontinue the issuance of new certificates and establish a three-year phase-out period for employers with existing certificates following the rule becoming final. Acting Secretary of Labor Julie Su stated, “With this proposal, the department expects that many workers currently paid subminimum wages under Section 14(c) will move into jobs that pay full wages, which will improve their economic wellbeing and strengthen inclusion for people with disabilities in the workforce.”

Comments on the proposed rule are due by January 17, 2025. With the upcoming change of administration, the proposed rule faces an uncertain future.

OSHA Extends Comment Period for Heat Standard Proposed Rule – The Occupational Safety and Health Administration (OSHA) has extended the period for submitting comments on the proposed Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings rule by 15 days until January 14, 2025. According to OSHA, the “proposed standard would apply to all employers conducting outdoor and indoor work in all general industry, construction, maritime, and agriculture sectors where OSHA has jurisdiction.” The proposed rule would require employers to develop a written injury and illness prevention plan for workplaces impacted by extreme heat. The plan would need to include a comprehensive list of the types of work activities covered by the plan as well as at least one heat safety coordinator to implement and monitor the plan. OSHA estimates that there are about 40 workers per year who die and close to 3,400 work-related heat injuries and illnesses annually that result in lost work time from exposure to environmental heat.

Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.

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