Legal Briefs

E.I. Du Pont de Nemours & Co. v. Smiley

Congress passed the Fair Labor Standards Act (FLSA) in 1938 to regulate certain employment practices between employers and employees. In order to put the law into effect, Congress delegated authority to the Department of Labor (DOL) to enforce the statute’s provisions. It’s a fundamental legal principle, however, that an executive-branch agency may only regulate those provisions that Congress has actually put into its authorizing statute. Where Congress has not address a certain practice, the agency has no authority to regulate and the practice is presumptively legal. Fast forward almost 80 years. E.I. Du Pont De Nemours and Co. (better known as DuPont), following standard industry practice, paid their employees for otherwise noncompensable meal breaks, using that compensation as credit towards the time employees spent performing certain work duties (especially “donning and duffing” special clothing and gear) before and after their shifts. The employees sued DuPont in federal court, arguing that the FLSA forbids this type of crediting and that they must be paid overtime pay for the donning/duffing time. The district court disagreed, finding that the statute was silent about the practice and so DuPont had done nothing illegal under the FLSA. On appeal, the U.S. Court of Appeals for the Third Circuit invited DOL to file an amicus brief regarding whether DuPont had violated the law—essentially allowing it to regulate. DOL admitted in its brief that the FLSA was silent on the issue, but argue that the statute implicitly forbade the practice. The Third Circuit then adopted that view by granting DOL Skidmore deference (by which judges defer to agency interpretations according to their persuasiveness), and reversed the district court’s ruling. Cato has now filed an amicus brief supporting DuPont’s petition for Supreme Court review. We argue that Third Circuit ignored the basic administrative-law and constitutional axiom that agencies can only exercise the powers delegated to them. Indeed, under Supreme Court separation-of-powers precedent, Congress must give executive agencies at least some “intelligible principle” to follow. The Third Circuit, however, would give any agency a virtually unlimited power to write any regulations it thinks a statute should cover, without any congressional authority. Moreover, when the court accorded Skidmore deference to the DOL amicus brief, it violated DuPont’s due process rights for two reasons. First, this was the first time in the FLSA’s long history that DOL had ever interpreted the statute to forbid the practice at issue—and two other circuit courts had already ruled that the practice was legal—so DuPont was denied fair notice. Second, by inviting a nonparty government agency into the litigation and deferring to its view, the court decided the case with bias towards one of the parties before it. The Supreme Court should take this case and explain that the Constitution’s separation of powers does not allow such judicial enabling of executive mischief. Administrative agencies simply cannot take it upon themselves to rewrite duly enacted legislation and then thrust their statutory revisions on private litigants for the first time in litigation.

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