TOP CHEF OR PERFECT STORM?

If the governmental alphabet soup was competing on Top Chef, it might win the competition for its several layers of flavor.  To the many regulated businesses dealing with the 2015 version of Big Brother, those layers feel more like so many squalls, a perfect storm one wave away from sinking even the most seaworthy ship.

The first layer is the statute itself – for federal agencies, the law passed by Congress.  The Fair Labor Standard Act (or “FLSA”), for example, says that employees of covered companies must be paid time and a half for hours worked over 40 in a week.  It also exempts employees in certain categories of jobs, but it does little to define those categories.

The second layer involved is administrative rule-making.  Where the FLSA may say that administrative employees are exempt from overtime, the DOL will define by rule the type of primary duties, pay scales, and other attributes that make an employee an administrative one for overtime purposes.  To do so, it goes through a rulemaking process where it proposes a rule, receives public comments, amends the proposed rule based on those comments, and eventually promulgates a regulation with compulsory power over regulated businesses.

But there is yet one more layer.  The DOL will also issue “interpretative rules.”  These are rules that construe how its own regulations might apply in specific cases.  They are not subject to the rulemaking process or public comments and are left to the full discretion of the Agency.  Thus, the DOL has changed its interpretation four times in ten years on whether mortgage loan officers would typically be administrative employees.  And that, the Supreme Court just confirmed, is within its power to do.

When navigating an administrative perfect storm, a good lawyer charting your course is often more of a necessity than a luxury.