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Supreme Court’s new expansive reading of FLSA is applied for first time by a Circuit Court

The Supreme Court held earlier this year in Encino Motorcars, LLC v. Navarro that the Fair Labor Standards Act (FLSA) should no longer be construed narrowly in favor of employees but should, instead, be given a “fair” reading based on its own language. The Supreme Court’s ruling has just seen its first application in a Circuit Court case, entitled Mosquera v. MTI Retreading Co., decided by the Sixth Circuit.

In Mosquera, the employee held an engineering degree but argued he spent less than 50% of his time doing work that required an engineering degree and should, therefore, not have been classified as a professional employee exempt from overtime. The Sixth Circuit disagreed. The Sixth Circuit noted the evidence that had been submitted in support of the employer’s summary judgment motion and dismissed the plaintiff’s own affidavit to the contrary, saying it was “unsubstantiated” and “self-serving.” The Sixth Circuit noted that, prior to Encino Motorcars, it would have looked on the plaintiff’s claim more favorably, interpreting the professional exemption “narrowly,” but under the Supreme Court’s new ruling, it was required to give the law a broader “fair” reading instead. Under the new approach to FLSA, the Sixth Circuit held the employer’s motion for summary judgment was “compelling” and as such, it held, the employee was properly characterized as a professional who was exempt from overtime.

Mosquera is no doubt the first in a long line of cases to come that will take a less “narrow” approach to interpreting FLSA.

Source:  Mosquera v. MTI Retreading Co. (6th Cir. 8/14/18).

To be a Dodd-Frank whistleblower, individual must complain to SEC

Dodd-Rank is the nation’s leading securities-related whistleblower law. What if an individual complains, not to the SEC, but to the company at-issue, is a mere internal complaint to the company sufficient to trigger Dodd-Frank’s protections? In a unanimous 9-0 decision, the Supreme Court, after reviewing the text of Dodd-Frank itself, held the answer was clear: Congress wrote Dodd-Frank to protect only complaints to the SEC. Therefore a complaint to the company at-issue, alone, is insufficient to trigger Dodd-Frank’s protections.

The case is also notable for the absence of analysis regarding Chevron deference. Chevron deference is the legal term used to refer to the practice of courts deferring to agency interpretations of statutes. Here, while Dodd-Frank itself clearly required a complaint to the SEC, the SEC had interpreted the language more broadly, saying that a complaint to a company alone should also be protected. The concept of Chevron deference has become quite controversial, and commentators anticipated this might be the case by which the Supreme Court revisited the topic. However, the Supreme Court, having decided the language of the statute itself was clear, had no opportunity to do so. The continuing viability of Chevron deference remains an issue for another case to resolve.

Source: Digital Realty v. Somers, case no. 16-01276 (Sup. Ct. 2/21/18).

Labor Secretary Acosta urges Executive Branch restraint

In a recent presentation for the Colorado Bar Association’s 2017 annual conference, I noted the relatively recent proliferation of Executive Branch guidances and other informal publications that have not gone through the formal rulemaking process required for the issuance of regulations. I predicted we will see (from a number of fronts including agencies themselves, the courts and Congress) a movement to swing the pendulum back and begin constraining such non-regulatory near-rulemaking. In other words, we will begin to see a push for agencies to return to the rulemaking process.

In a recent speech, Luis Acosta, Secretary of the U.S. Department of Labor, made a similar point and, indeed, took the point further.

I would like to begin with some basic observations, well understood by everyone here. Since the New Deal, we have sought solutions to govern an increasingly technical and complex economy. Congress has seen fit to rely on the Executive’s rulemaking discretion, and simultaneously, it has tried to limit that discretion.

Secretary Acosta emphasized that these informal guidances not only skip the rulemaking process but, as a result, do not enjoy scrutiny through the checks and balances that the rulemaking process provides, including opportunities to obtain “the public’s input” and Congressional oversight. He contends this is particularly troubling because informal guidance is nonetheless provided some deference by some courts (whether formal or simply practical deference).

Let me be clear: Agencies can, and must, interpret their regulations. And often, the regulated public is helped by knowing how an agency interprets its regulations. That is why I have resumed the policy of issuing opinion letters to companies that ask DOL whether their practices are lawful. These opinion letters do not enact substantive change to the law; they simply inform the requester how DOL will apply the law to a particular set of facts.

But so-called “interpretations” that go beyond providing clarity and become mechanisms to change the law are another matter entirely. The reason these interpretations matter, of course, is that the courts defer to them.

He concluded with direction to the agencies within the DOL and a call to the agencies outside his control to return to formal rulemaking.

The restraint I am advocating is hard, because the desire for results is real. Rulemaking is hard, and it is necessary. Congressional action may be hardest of all, but it is demanded by our Constitution.

In the end, taking the hard road connects us to the promise of our Founders and paves the future path that is right for our Republic.

This is an issue likely to come up in several Supreme Court cases this year. Even if not part of a case’s formal record, the courts, especially the Supreme Court, will be aware that  Secretary of one of the most powerful federal agencies spoke publicly on these issues.

Source: Acosta presentation to Federalist Society