Texas business owner sues DOL for the right to flexibility in contracting with his managers

Austin, TX; August 9, 2022: Today, Robert Mayfield, second-generation owner of more than a dozen restaurants in and around Austin, Texas, filed suit against the Department of Labor (DOL) to stop a rule that limits his ability to offer his managers the kinds of compensation packages he thinks best.

Mr. Mayfield pays significantly above the minimum wage, starting at $15 per hour to attract top talent. And when elevated to management roles, his employees receive a guaranteed salary, which means more predictability in pay, as well as opportunities for bonuses based on company profits. But these management-employees would stand to earn more in bonuses if DOL regulation allowed more flexibility for employers in setting compensation structures.

The Fair Labor Standards Act expressly exempts “bona fide executive, administrative, or professional (EAP) employees”—like Dairy Queen managers—from its default hourly pay rules. Nonetheless, the Department of Labor has promulgated regulation denying Congress’ exemption for employees performing executive, administrative, or professional duties unless they are paid $35,568 annually. The DOL raised the salary level requirement by 50 percent in 2019—from $23,660 annually. Now the Biden administration has announced that it intends to propose a new rule that will likely raise the minimum salary still higher. Some analysts suggest the new floor could be as high as $70,000.

“The Department of Labor doesn’t have authority to dictate salary level requirements for management-level employees that Congress has exempted from hourly pay requirements,” said Luke Wake, an attorney for Pacific Legal Foundation. “If Congress wanted a salary level requirement for exempt white-collar employees, it would have said so in clear terms—rather than giving a blank check for the Secretary of Labor to draw the line wherever he might like.”

The case is Robert Mayfield v. U.S. Department of Labor, filed in U.S. District Court for the Western District of Texas. Robert Mayfield and R.U.M. Enterprises, Inc. are being represented by Pacific Legal Foundation.