Texas Business Owner Who Set His Own Overtime Rules Loses Suit Against Labor Department

The U.S. Department of Labor building in Washington on March 26, 2020. Alex Edelman/AFP via Getty Images

A federal appeals court has upheld the U.S. Department of Labor’s rule mandating automatic overtime pay for workers earning less than a certain amount.

The department in 2019 said that workers who make under $684 a week, or $35,568 a year, must be paid overtime for hours beyond 40 a week. The rule raised the figure 50 percent, from $455 a week. The rule was issued under the Fair Labor Standards Act (FLSA).

Certain employees such as managers, or executive, administrative, professional, and outside sales employees do not need to be paid overtime, provided they make more than the salary level set by the labor department.

Robert Mayfield, a small business owner in Texas, sued the agency over the rule. He said the department does not have the authority to set exceptions to not paying overtime based on salary.

Mayfield said he paid managers bonuses based on performance rather than overtime pay, and didn’t want to change his system.

The U.S. Court of Appeals for the Fifth Circuit on Sept. 11 ruled against Mayfield.

The FLSA contains an “uncontroverted, explicit delegation of authority” to the labor department, U.S. Circuit Judge Jennifer Walker Elrod wrote for the three-judge panel assigned the case. And the agency’s setting of salary level for overtime is within that authority, she said.

Elrod pointed to how the department has been adjusting the salary level for the exceptions since shortly after Congress passed the FLSA.

“And for those who subscribe to legislative acquiescence, Congress has amended the FLSA numerous times without modifying, foreclosing, or otherwise questioning the Minimum Salary Rule,” she wrote.

Mayfield’s lawyers saw the ruling as intrusive.

“We are disappointed with the Court’s decision to uphold the minimum salary requirement for exempt employees, a clearly unconstitutional rule that goes beyond the powers Congress granted the Department of Labor,“ Frank Garrison, an attorney with the Pacific Legal Foundation, told The Epoch Times in an email. ”We will continue to fight for our client and the right of small business owners to operate their companies how they see fit, free from government intrusion.”

The Department of Labor did not return a request for comment.

The agency recently issued an updated rule that mandates overtime pay for workers making less than $58,656 a year if they work more than 40 hours a week.

The rule is challenged by several ongoing lawsuits.

The Fifth Circuit’s ruling upheld a 2023 decision from U.S. District Judge Robert Pitman, who also found the rule fell within the labor department’s authority.

Elrod was joined by U.S. Circuit Judges Cory T. Wilson and Jacques L. Wiener Jr.