DOL’s minimum salary rulemaking under fire: Is there any limiting principle?

There are a few things everyone should be able to agree on when it comes to the government. First, our government should answer to the People—not the other way around. Second, federal agencies should always have to conform to the laws Congress enacted. And third, there must always be limits on an agency’s power to make rules affecting our lives and liberties.

These are foundational principles that the Framers enshrined and protected in the Constitution—including by dividing the federal government’s powers among the separate branches. This division of power ensures that laws are made by the People’s representatives in Congress, not by unelected bureaucrats in Washington, DC. But believe it or not, federal agencies, like the U.S. Department of Labor, often flout these foundational precepts.

This is what happened in Robert Mayfield’s case. Mayfield is a small business owner in Texas. He is challenging the DOL’s claimed authority, under the Fair Labor Standards Act (FLSA), to impose and raise minimum salary requirements as a condition of recognizing his managers as exempt from the FLSA’s default minimum wage and overtime requirements. Because the DOL keeps raising minimum salary requirements, Mayfield’s company must now convert much of his management team to an hourly non-exempt status. And this demotion has unfortunate consequences. It means these formerly exempt employees will lose opportunities for bonuses.

The DOL claims that Congress delegated it this power, even though the pertinent statutory text provides no basis for the agency’s claimed authority—the FLSA is silent on the question. Worse still, the agency claims power to raise minimum salary rules as high as the Secretary of Labor thinks is “appropriate”—without any direction from Congress.

Congress said that “any” person “employed in a bona fide executive, administrative, or professional capacity” is exempt. But the DOL claims power to impose minimum salary rules because Congress said the agency could “define and delimit” the meaning of the statutory text. In other words, the DOL believes it can assign whatever meaning it thinks appropriate to achieve its preferred regulatory agenda.

This “blank check” interpretation violates separation of powers. The Constitution prohibits Congress from giving away its lawmaking powers to federal agencies. This “nondelegation doctrine” requires that Congress must decide the important issues when enacting law; it cannot delegate unfettered powers for agencies to fashion rules as they like without any direction. As the Fifth Circuit recently explained, “there are limits of delegation which there is no constitutional authority to transcend.”

So even accepting the DOL’s errant claim that Congress delegated minimum salary rulemaking authority, there is a serious constitutional problem here. Why? Because the DOL is claiming power without any limits. The government cannot point to anything that controls or even loosely guides the DOL’s judgment in deciding how high to raise minimum salary rules.

We recently had the opportunity to explain our arguments to the Fifth Circuit. During our hearing, the Court repeatedly asked the government attorney whether she could identify any limitation Congress had placed on the DOL’s claimed power. But she could not. The most she could argue was that Congress has authorized the DOL to “work out the details.”

But work out the details how?

There was no answer. All the government could muster was the assertion that the DOL had exercised its claimed authority reasonably because the agency has looked to data and consulted with stakeholders when raising minimum salary rules. But that’s not a statutory limitation on how high the DOL can raise minimum salary rules.

The court asked: “What is the principle that cabins what the agency can do?” But there is no answer because Congress said absolutely nothing about minimum salary rules. By contrast, when Congress delegated authority for the DOL to impose industry-specific minimum wage orders in the 1930s, Congress imposed clear parameters—with a definite ceiling on how high the agency could go. But the FLSA provides no such direction for the DOL’s claimed minimum salary rulemaking authority.

This matters because the DOL continues to raise minimum salary rules higher and higher. When Mayfield filed his lawsuit, the DOL had raised the minimum salary rule from $23,660 to $35,568. But the DOL recently finalized a new rule mandating minimum salaries of at least $43,888. The DOL will dramatically raise minimum salary rules to $58,656 next year. And to boot, the DOL’s rule will now automatically raise minimum salary rules ever higher, based on a formula that the DOL devised on its own—without direction from Congress.

These mandates do not affect Mayfield alone. They affect all manner of small businesses and non-profit organizations who will find it difficult to continuously raise salaries—and an estimated six million employees over the next ten years. Like Mayfield’s company, many of these entities will have no choice but to demote once-exempt employees to hourly non-exempt status, or to make other restructuring decisions that could have unintended consequences for employees.

So, as ever, there are consequences when the government is allowed to subvert separation of powers. But the good news is that Pacific Legal Foundation is relentlessly fighting in cases like this to restore separation of powers principles. After all, it’s vital to American liberty that we ensure that government answers to the People—which means ensuring definite limits on any delegation of rulemaking authority.