The Supreme Court has ruled that federal agencies may issue initial and amended interpretive rules without advance notice and without soliciting commentary from interested parties.
The case was Perez v. Mortgage Bankers Association (MBA). Thomas Perez is secretary of the Department of Labor (DOL), and at issue was his agency’s abrupt switch from previous interpretations on whether loan officers fall within the administrative exemption category of the Fair Labor Standards Act (FLSA).
In 2006, the Bush administration’s DOL had issued an opinion letter stating loan officers are exempt from overtime, but in 2010 the Obama administration’s DOL reversed that opinion and issued an interpretative letter stating that loan officers do not fall within the administrative exemption and thus qualify for overtime pay.
The MBA sued, and after previous court stops, the case went to the Supreme Court on March 9, where the justices ruled unanimously that interpretive rulemaking is not covered by the notice-and-commentary requirements of the Administrative Procedure Act (APA) as the MBA had claimed.
This ruling opens the floodgate for the DOL to reinterpret the salary requirement for earning an overtime exemption. The salary requirement currently stands at $455 a week, or less than $24,000 a year. The DOL has promised a new interpretation in the first quarter of calendar 2015. The agency can now do so without a notification of intent or a requirement to seek public commentary.
If you own or operate a small to medium-sized business, managing all your employees plus meeting federal labor laws and regulations can be daunting, especially with new rules being issued all the time. To help you understand your rights and responsibilities in every facet of running a business, please order a copy of Personnel Concepts’ All-On-One HR Compliance Program for Small Businesses.