Texas Restaurant Owner Sues US Labor Dept. Over Compensation Rule
Texas Restaurant Owner Sues US Labor Dept. Over Compensation Rule

By Matthew Vadum

Texas restaurateur Robert Mayfield is suing the U.S. Department of Labor (DOL) to halt a rule that restricts his ability to offer his managers compensation packages that he believes are appropriate.

The legal complaint (pdf) in the case, Mayfield v. U.S. Department of Labor, court file 1:22-cv-00792, was filed in U.S. District Court for the Western District of Texas on Aug. 9. Labor Secretary Martin Walsh is also named as a defendant.

Mayfield, a resident of Austin, is the sole shareholder and owner of R.U.M. Enterprises Inc. He took over the family business in 1979 and has been working for it for 43 years. The company operates 13 Dairy Queen franchises and a Wally’s Burger Express.

Mayfield already pays well above the minimum wage, beginning at $15 per hour to bring in top talent. When they take on management roles, employees receive a guaranteed salary, as well as bonuses based on company profits.

But his managers would earn larger bonuses if a DOL regulation gave employers greater flexibility in determining compensation rates, according to the Pacific Legal Foundation (PLF), a national nonprofit public interest law firm that’s representing Mayfield.

The federal Fair Labor Standards Act specifically exempts “bona fide executive, administrative, or professional (EAP) employees” from its default hourly pay rules, but the department issued a regulation contradicting the law’s exemption for employees performing executive, administrative, or professional duties unless they are paid $35,568 annually.

DOL boosted the salary level requirement by 50 percent in 2019—from $23,660 annually. Now, the Biden administration has announced that it plans to propose a new rule that will likely raise the minimum salary even higher. Some analysts say the new floor could be as high as $70,000.

“The Department of Labor doesn’t have authority to dictate salary level requirements for management-level employees that Congress has exempted from hourly pay requirements,” PLF attorney Luke Wake told The Epoch Times.

“If Congress wanted a salary level requirement for exempt white-collar employees, it would have said so in clear terms—rather than giving a blank check for the Secretary of Labor to draw the line wherever he might like.”

Nothing in the Fair Labor Standards Act gives DOL authority “to impose salary requirements on this class of employees at all,” Wake said.

According to the legal complaint, the Constitution gives Congress alone “the power to make law and prohibits Congress from giving away its lawmaking power to the Executive Branch.” Despite this, the secretary asserts he has “broad, discretionary lawmaking power to impose and freely modify salary-level requirements for executive (i.e., management) employees who are expressly exempt from the Fair Labor Standards Act’s general rule that employees must be paid on an hourly basis.”

DOL claims Congress gave it the power to make the rule when it authorized it to “define” and “delimit” the scope of the act’s exemption for management employees, but PLF says the statutory text denies any power to mandate salary levels.

“Any other interpretation of the statute would violate the separation of powers because Congress cannot give the Secretary an unbridled power to decide what salaries employers should pay their exempt employees,” the complaint states.

But DOL “has long assumed that it has that authority. And we don’t think that’s the proper interpretation of the statute,” Wake said.

The department argues that it has what amounts to “lawmaking power with regard to this issue and the Constitution prohibits Congress from giving away its lawmaking powers,” the lawyer added.

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