Government's Ability to Flip-Flop Interpretations of FLSA and Other Laws Under Supreme Court Review

Author: Michael Cardman, XpertHR Legal Editor

June 17, 2014

A greater consistency in how the US Department of Labor (DOL) and other federal agencies interpret the Fair Labor Standards Act (FLSA) and other employment laws could be on the horizon.

The Supreme Court has agreed to hear Mortgage Bankers Ass'n v. Perez, 2013 U.S. App. LEXIS 20178 (D.C. Cir. 2013), cert. granted (U.S. June 16, 2014) (No. 13-1041) and another case concerning whether a federal agency must engage in notice-and-comment rulemaking before it can significantly alter its interpretations of its own regulations.

These cases involve some of the finer points of how federal employment laws are applied in the real world. At the highest level, Congress passes a law. After the law is passed, the federal agency in charge of enforcing it issues regulations that interpret the law, often fleshing it out with examples and other details. These regulations are usually issued through the notice-and-comment rulemaking process, in which proposed regulations are published in the Federal Register and the public is given the chance to comment on them. Courts usually defer to these notice-and-comment regulations if they do not conflict with the statute.

Sometimes the DOL and other agencies offer less formal guidance such as opinion letters or administrator interpretations, in which they interpret how the law applies to a particular scenario presented by an employer. These non-notice-and-comment interpretations are not given the same deference by courts, but they can help limit an employer's damages if it can demonstrate that it followed such an interpretation in good faith.

The Mortgage Bankers case involves the kind of 180-degree enforcement turns that can make it difficult for an employer to comply with the law. In 2006, the DOL under the Bush administration issued an opinion letter in which it concluded that mortgage loan officers were exempt from the minimum wage and overtime requirements of the FLSA. Four years later in 2010, under the Obama administration, the DOL issued a new administrator interpretation finding the mortgage loan officers were not exempt and rescinding the old opinion letter.

In turn, the Mortgage Brokers Association filed a lawsuit to void the DOL's new interpretation, arguing that it was invalid because the DOL had not gone through the notice-and-comment rulemaking process. The United States Court of Appeals for the District of Columbia Circuit granted the Association's request. The DOL appealed to the Supreme Court, which is expected to hear oral arguments in the cases during its next term.