Month: September 2024

On September 11, 2024, the U.S. Court of Appeals for the Fifth Circuit upheld the U.S. Department of Labor’s (DOL) authority to use a salary basis to define its white-collar overtime exemptions.

The Fifth Circuit, in Mayfield v. U.S. Department of Labor, held that a 2019 DOL rule, which sought to raise the minimum salary requirement for the so-called white collar or executive, administrative, or professional (EAP) employee exemptions to the Fair Labor Standards Act (FLSA), “fell within the [DOL’s] explicitly delegated authority to define and delimit the terms of the Exemption.”

The ruling is a significant win for the DOL as it defends its new April 2024 rule to further increase the minimum salary requirement for the EAP exemptions in similar legal challenges by business groups. The groups argue that the DOL rule exceeds the agency’s statutory authority because under the new rule, employees’ EAP status turns on their salary, not their job duties.

Minimum Salary Requirement

The 2019 DOL rule raised the required minimum weekly salary to qualify for the EAP exemptions by more than 50 percent, from $455 to $684 per week. Robert Mayfield, who owns thirteen fast-food restaurants in Austin, Texas, challenged the rule, arguing that the DOL has always lacked authority to set a minimum salary level for the EAP exemptions.

However, a Fifth Circuit panel disagreed. The panel found that a minimum salary requirement is “consistent with DOL’s statutorily conferred authority,” both as a defining “what it means to work in an [EAP] capacity” and as delimiting the scope of the EAP exemption.

The panel further sided with the DOL in noting that the inclusion of the word “executive” in the FLSA as part of the exemption connotes a “status of level for which salary may be a reasonable proxy,” hence it is frequently referred to as the “white collar exemption.”

“Distinctions based on salary level are also consistent with the FLSA’s broader structure, which sets out a series of salary protections for workers that common sense indicates are unnecessary for highly paid employees,” the panel stated in its decision.

Agency Deference

The Fifth Circuit panel further addressed the Supreme Court’s June 2024 decision in Loper Bright Enterprises v. Raimondo, which held that courts must exercise independent judgment in deciding whether an agency acted within its statutory authority. The Fifth Circuit examined whether the DOL should be afforded so-called Skidmore deference, which allows a court to determine the appropriate level of deference based on the agency’s support of its action.

“We need not address that issue here because DOL’s interpretation of the statute is ‘best’ based on traditional tools of statutory interpretation and without reliance on deference of any kind,” the panel stated.

To the extent that Skidmore deference is in force, the panel said it applies to the 2019 DOL overtime rule: “The DOL has consistently issued minimum salary rules for over eighty years. Though the specific dollar value required has varied, DOL’s position that it has the authority to promulgate such a rule has been consistent. Furthermore, it began doing so immediately after the FLSA was passed.”

2024 DOL Rule

The Fifth Circuit ruling in Mayfield comes after a federal judge in the Eastern District of Texas granted a preliminary injunction blocking the 2024 DOL overtime rule as it applied to the State of Texas as an employer. The judge found that challengers were likely to succeed in showing that the minimum salary requirement exceeded the DOL’s authority, relying on the Loper Bright decision. That case, and another case challenging the rule in the Western District Texas, are currently in the midst of summary judgment briefing that will address the ongoing viability of the rule on the merits.

The 2024 DOL rule raised the minimum weekly salary to qualify for the EAP exemption from $684 per week to $844 per week, or the equivalent salary of $43,888 per year, on July 1, 2024. The rule then called for the minimum salary to increase to $1,128 per week, the equivalent of a $58,656 annual salary, on January 1, 2025. Under the rule, that threshold would increase every three years based on up-to-date wage data.

Key Takeaways

The Fifth Circuit ruling in Mayfield backs the DOL in its attempts to set minimum salary requirements for its white-collar overtime exemptions despite the FLSA not explicitly calling for the DOL to set such a requirement. The minimum salary increases pushed by the DOL pose significant compliance challenges for employers in setting employee compensation structures. In total, the 2024 rule is expected to make four million employees previously eligible for the exemption no longer eligible and, therefore, entitled to overtime compensation under the FLSA.

The Labor Department on Wednesday said that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – rose 0.2% in August from the prior month

Prices climbed 2.5% in August from the same time last year, down from 2.9% in July. That’s the lowest level since February 2021.

So-called core prices, which exclude more volatile measurements of gasoline and food to better assess price growth trends, rose 0.3% in August from the prior month. The gauge was up 3.2% from a year ago, and unchanged from last month.

Overall, the report indicates that inflationary pressures in the U.S. economy are continuing to ease, though prices remain above the Federal Reserve’s 2% target.

The softer-than-expected inflation reading comes as Federal Reserve policymakers are set to hold a highly anticipated meeting in which they are likely to cut interest rates amid signs that the economy is cooling. After the central bank kept interest rates at a 23-year-high range of 5.25% to 5.5% in July, Fed Chair Jerome Powell signaled in an August speech at the Jackson Hole conference that the “time has come” to cut interest rates.

Utility regulators in the United States are considering increases to electricity rates again this year as electric utilities seek to cover the investments needed to maintain and expand their systems. Utilities requested rate increases in recent years to pay for improvements to transmission and distribution lines to withstand increasingly serious weather and fire events, prepare for increased electrification as state and federal clean energy legislation is implemented, and move more energy reliably, according to S&P Global Market Intelligence Capital IQ Pro.

State utility regulators signed off on $9.7 billion in net rate increases in 2023, more than double the $4.4 billion authorized in 2022. The net increase—increases minus decreases—reflects $10.3 billion in authorized rate increases and only $0.6 billion in rate decreases. More than one-third of the net rate increase supported increases at two California utilities seeking to make their grids less susceptible to wildfire.

From the start of 2023 through August 12, 2024, regulators nationwide have authorized 58% of the net rate increases that were requested by electric utilities, according to S&P Global Market Intelligence Capital IQ Pro. If the same ratio of rate increase requests is allowed for the rest of 2024, rate increases are on track to reach $8.9 billion (adjusted for inflation to 2023 dollars) this year.

In many states, all components of a typical electric bill are approved by the state utility regulator. In states that allow competition for electricity supply, energy suppliers charge competitive rates for the generation component of power bills. All charges for energy delivery over transmission and distribution lines are still regulated by state utility commissions.

When regulated investor-owned utilities (IOUs) expect their future revenues needed to operate their systems will exceed expected revenue from consumers under existing rates, they request a rate case in front of the state regulator to justify raising their rates. IOUs are generally reimbursed on allowed operating and maintenance costs and investments and on a regulator-approved rate of return on their investment as profit. Other utilities, such as cooperatives and government-owned municipal, state, political utility district, and federal utilities, are non-profit and may not be regulated in the same way.

State environmental regulators released a final environmental impact statement Friday on a Canadian energy firm’s plans to reroute an oil and gas pipeline around a northern Wisconsin tribe’s reservation.

In 2019, the Bad River Band of Lake Superior Chippewa sued Canadian firm Enbridge in federal court to shut down and remove the 70-year-old Line 5 on tribal lands. In response, the company proposed a $450 million plan rerouting the pipeline around the tribe’s reservation.

Line 5 runs 645 miles from Superior to Sarnia, Ontario. It’s designed to carry up to 540,000 barrels of oil and natural gas liquids daily.

In the proposed reroute, a new stretch of 30-inch pipe would run 41 miles around the reservation in Ashland and Iron counties. State and federal regulators say the project would cross 186 waterways and temporarily disturb 101 acres of wetlands.

The 898-page document released Friday relied on 10,000 pages of materials that reflects hours of testimony and more than 32,000 comments submitted to the agency, according to Greg Pils, director of the DNR Bureau of Environmental Analysis and Sustainability.

“This is a critical step in making a permitting decision,” Pils said. “The (environmental impact statement) does not compel a decision, but it is there to inform our decision-making.”

Enbridge has applied for multiple permits with the agency. Pils said the agency doesn’t have a timeline for issuing decisions on whether to approve or deny those applications.

In a statement, Enbridge spokesperson Juli Kellner said the document’s release is an important step in the permitting process for the project.

“The project has been designed to avoid and minimize temporary construction impacts, and we believe the planned route is the best alternative,” Kellner wrote. “The Wisconsin DNR has thoroughly evaluated the environmental impacts of the proposed project.”

Gross property tax levies approved in 2023 by local taxing jurisdictions in Wisconsin increased by4.6% statewide, which exceeded inflation and was the largest increase since 2007.

Meanwhile, equalized property values increased 7.7% in 2024 – a slowdown from the record pace of the two prior years, but still a large increase by recent standards.

Annual growth in property values once again exceeded the growth in property tax levies, causing the statewide gross property tax rate to decline for the tenth consecutive year. It went from $16.78 per $1,000 of equalized property value in 2022 to $15.53 in 2023, a 7.5% decline.

These are among the key statewide findings from the Wisconsin Policy Forum’s newly updated 2024 Property Values and Taxes DataTool, which features interactive data for all of Wisconsin’s 72 counties and nearly 1,850 cities, villages, and towns. It is the latest in a series of Forum interactive tools meant to provide all Wisconsinites with relevant facts about their schools, local governments, and state and regional economy. Key findings from the tool are

 The state’s 7.7% increase in total equalized property values in 2024 was significantly lower than the growth seen in 2022 (13.8%) and 2023 (13.1%). Still, with the exception of those two years, the 2024 increase was the highest since 2006. In the period between 2007 and 2021, statewide annual property value increases never exceeded 6.8%.

 Residential property values for the state of Wisconsin grew 8.7% in 2024, which was significantly lower than the state’s increases in 2022 (14.9%) and 2023 (14.0%) but still the third-largest rise since 2006. Meanwhile, after near-record growth of 13.2% (2022) and 10.9% (2023), statewide commercial property values increased by 10.1% in 2024.

 The 4.6% increase in statewide gross property tax levies – which appears on December 2023 tax bills, and provides revenue for 2024 local budgets — was nearly double the previous year’s increase. It also surpassed the 2023 inflation rate of 4.1%. This follows two years in which inflation substantially outstripped statewide levy increases.

A trade group representing independent grocery stores is calling for lawmakers and regulators to enforce an existing antitrust law it believes would do more to improve competition and help consumers than the push against alleged “price gouging.”

The National Grocers Association, which represents independent grocers that are privately owned by families or by employees as well as wholesalers in that segment, has called for the law’s use to address pricing competition in the industry. Chris Jones, NGA’s chief government relations officer and counsel, told FOX Business that pricing from suppliers is one of the biggest issues the group’s members face in competing with larger rivals.

“You’ve got a handful of really large, dominant firms in this country who have a lot of power in the market,” he said. “Walmart being the biggest fish in the sea… they’re pretty close to 30% of sales in this country, over $300 billion in food sales in a $1 trillion market. What that means for the supply chain is that they have a tremendous amount of power over suppliers.”

Jones explained that the supply chain clout of larger companies like Walmart helps them get more favorable pricing with suppliers. He went on to say that the proposed Albertsons-Kroger merger, which is the subject of a pending antitrust case, has shown that those two companies believe they need to join forces to better compete against Walmart in the grocery industry.

“So we see it as a major threat to our segment of the industry,” Jones said of the proposed merger. “I think the problem shouldn’t be solved through a large merger. It should be solved through the enforcement of laws that are supposed to limit the ability of Walmart to use its coercive power. A law called the Robinson-Patman Act is the one that comes to mind that’s supposed to help level the playing field — so long as buyers are purchasing in equal or similar quantities, they should be getting the same price.”

The Robinson-Patman Act aims to prevent sellers from charging competing buyers different prices for the same commodity or discriminating in providing “allowances” in the form of compensation for advertising and other services.

“This kind of price discrimination may give favored customers an edge in the market that has nothing to do with their superior efficiency,” the Federal Trade Commission (FTC) notes on its website in reference to the law. “Price discriminations are generally lawful, particularly if they reflect the different costs of dealing with different buyers or are the result of a seller’s attempt to meet a competitor’s offering.”

A report by the law firm Morgan Lewis noted that the Department of Justice announced it would stop enforcing the Robinson-Patman Act in 1977 and that the FTC hasn’t brought a case under the law since 2000 — though the law has since been enforced through civil litigation. However, the report noted that the FTC has in recent years expressed an interest in revitalizing the law’s enforcement.