The United States Court of Appeals for the Fifth Circuit decided that the Department of Labor (DOL) has the authority under the Fair Labor Standards Act (FLSA) to establish a minimum salary in order to qualify for the executive, professional, and administrative exemptions. The Internal Revenue Service (IRS) issued interim guidance on employer matching contributions to retirement plans based on student loan payments made by employees. President Biden issued an executive order to assist in the creation of high quality jobs for those projects receiving federal financial assistance. The Equal Employment Opportunity Commission (EEOC) released a report on the lack of diversity in the high-tech sector workforce.
Fifth Circuit Upholds FLSA Salary Basis Test – The United States Court of Appeals for the Fifth Circuit has dismissed a challenge to the minimum salary requirement included in the Fair Labor Standards Act (FLSA) regulations issued by the Department of Labor (DOL) in 2019. In affirming the summary judgment issued by the District Court, the Fifth Circuit in the case of Robert Mayfield v. U.S. Department of Labor concluded that “the 2019 minimum salary rule falls within the Department’s explicitly delegated authority to define and delimit the terms of the exemption and…that power is not an unconstitutional delegation of legislative power.”
Robert Mayfield owns thirteen fast-food restaurants in Austin, Texas. He sued the DOL claiming that the 2019 rule raising the minimum salary required to qualify for the executive, administrative or professional exemption exceeded DOL’s statutory authority. The U.S. District Court for the Western District of Texas granted DOL’s motion for summary judgement.
The Fifth Circuit noted that in enacting the FLSA, Congress delegated the authority to the DOL to “define and delimit” the terms of the exemption. For over 80 years, according to the Fifth Circuit, DOL has included a minimum salary rule that prevented workers from qualifying for the exemption if their salary is lower than a specified level. The Fifth Circuit stated “DOL has long justified its rules on the ground that the terms used in the EAP Exemption connote a particular status and prestige that is inconsistent with low salaries.”
The Fifth Circuit believed that the use of salary level fit within the overall structure of the FLSA, “which sets out a series of salary protections for workers that common sense indicates are unnecessary for highly paid employees.” The Fifth Circuit declared that Congress has amended the FLSA several times “without modifying, foreclosing, or otherwise questioning the minimum salary rule.” The Fifth Circuit cautioned that while DOL has the authority to impose a minimum salary rule that sets boundaries on the scope of the executive, administrative and professional exemptions that authority is not without its limits. The Fifth Circuit concluded that “DOL cannot enact rules that replace or swallow the meaning those terms have.”
IRS Issues Interim Guidance on Employer Contributions to Retirement Plans Related to Employee Student Loan Payments – The Internal Revenue Service (IRS) issued Notice 2024-63 that provides interim guidance to sponsors of 401(k) and similar retirement plans that provide matching contributions based on eligible student loan payments made by their participating employees. A law enacted in 2022 permitted employers with 401(k), 403(b), 457(b) or SIMPLE IRA plans to provide matching contributions based on student loan payments, rather than based only on elective contributions to retirement plans. The law became effective for plan years starting after December 31, 2023.
According to the IRS, the interim guidance addresses issues such as general student loan matching contribution eligibility rules, the requirements for an employee certification that student loan matching contribution requirements have been met, student loan matching contribution procedures that a plan can adopt, and special nondiscrimination testing relief for 401(k) plans that include student loan matching contributions.
The interim notice applies for plan years beginning after December 31, 2024. The IRS intends to issue proposed regulations on this subject and invites comments on the interim notice. The comments are due by October 18, 2024.
Good Jobs Executive Order Issued – President Biden issued an Executive Order on Investing in America and Investing in American Workers. The Executive Oder states “As implementation of the Investing in America agenda continues, it is essential that it supports the creation of well-paying jobs, especially union jobs, that improve opportunities for millions of Americans.” The Executive Order focuses on projects that receive federal financial assistance. The Executive Order establishes the Investing in Good Jobs Taskforce to coordinate policy development that
leads to the establishment of high-quality jobs and supports the effective implementation of this order.
The Executive Order calls for prioritizing projects that:
EEOC Report Finds Lack of Diversity in the High Tech Workforce – The Equal Employment Opportunity Commission (EEOC) released a report titled “High Tech, Low Inclusion: Diversity in the High Tech Workforce and Sector from 2014 – 2022. EEOC found demographic disparities for workers in 56 science, technology, engineering, and mathematics (STEM) occupations and industries. “Sixty years after passage of the Civil Rights Act of 1964, there is a high degree of underrepresentation and a disturbing lack of career advancement for female, Black, and Hispanic workers in the high tech workforce, despite the recent period of growth in high tech occupations,” said EEOC Chair Charlotte A. Burrows.
The EEOC research found that Black and Hispanic workers are substantially underrepresented in the high tech workforce compared to their participation in the overall workforce. They are also underrepresented as managers in the high tech workforce. Women were less than a quarter of the high tech workforce which is the same share as in the past two decades and far less than their representation in the total workforce. According to the EEOC, the high tech workforce is generally younger than the total workforce and the percentage of workers over the age of 40 has declined. The EEOC suggests “that discrimination likely contributes to the relatively low employment of women, Black workers, Hispanic workers, and older workers in high tech.”
Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.