ALF Amicus Brief Argues That Courts, Not Bureaucrats, Should Interpret Federal Regulations

The specific question presented in this Fair Labor Standards Act (FLSA) case involves exclusion of business travel-related per-diem allowances from an employee’s regular rate of pay for overtime calculation purposes. But the case also raises a more fundamental question concerning the deference or weight that a court gives to a federal agency’s interpretation of its own regulations.  On September 13, 2021, the Atlantic Legal Foundation  filed a petition-stage amicus brief, authored by ALF Executive Vice President & General Counsel Larry Ebner, arguing that the Ninth Circuit violated Supreme Court judicial deference precedent by relying upon a  Department of Labor (DOL) Field Operations Handbook in ruling that under certain circumstances, per-diem payments should be treated as compensation rather than as expense reimbursements. A Law360 article, published on September 14, 2014, highlights ALF’s amicus brief.

Issue Areas:

Free Enterprise, Limited Government

Read the Amicus Brief:
Question(s) Presented:

Whether, under the Fair Labor Standards Act (FLSA), business travel-related per-diem allowances are excluded from the “regular rate” of pay for overtime calculation purposes if such payments are proportionately reduced for employees who decline to work all of their contractually required shifts.

Whether the Ninth Circuit’s reliance on an unauthoritative Department of Labor handbook to interpret an unambiguous Department of Labor regulation conflicts with Supreme Court judicial deference precedents under Kisor/Auer and Skidmore.

Additional Background:

Under the FLSA, 29 U.S.C. § 201 et seq., employees who work more than 40 hours per week must be paid overtime “at a rate not less than one and one-half times the regular rate at which he is employed.”  Id. § 207(a)(1).  The statute expressly excludes from the definition of “regular rate,” however, “reasonable payments for traveling expenses, or other expenses, incurred by an employee in the furtherance of his employer’s interests.”  Id.  § 207(e)(2).  More specifically, DOL’s implementing regulation states in pertinent part that reimbursement for the “reasonably approximate amount expended by an employee who is traveling ‘over the road’ on his employer’s business, for transportation . . .  and living expenses away from home, [and] other travel expenses . . . incurred while traveling on the employer’s business” will “not be regarded as part of the employee’s regular rate.”  29 C.F.R. § 778.217(b)(3).

Petitioner AMN Services, a healthcare staffing company, reduces the per-diem payment for any of its traveling nurses or other clinicians who do not work all of the shifts required by their employment contracts. The district court saw “no reason why this per diem reduction practice should alter the characterization of the per diem as not part of the ‘regular wage.”’ But a Ninth Circuit panel disagreed and reversed. The court of appeals relied in part upon a sentence in an internal DOL Field Operations Handbook stating that “[i]f the amount of per diem or other subsistence payment is based upon and thus varies with the number of hours worked per day or week, such payments are not a part of the regular rate in their entirety.” The Handbook’s preface, however, states that “It is not used as a device for establishing interpretative policy.”


ALF’s Amicus Brief:

ALF’s amicus brief argues that the Supreme Court should grant review not only because the FLSA overtime pay question affects a broad spectrum of businesses and industries, but also because the Ninth Circuit violated the Court’s judicial deference precedent by relying upon the DOL Handbook. More specifically, the amicus brief argues that under Kisor v. Wilkie, 139 S. Ct. 2400 (2019), “Auer deference” — judicial deference to an agency’s interpretation of its own regulations — does not apply where, as in this case, the regulation at issue is unambiguous, and the agency’s interpretation is both unauthoritative and unreasonable. The amicus brief also argues that the Handbook does not qualify for “Skidmore deference,” i.e., it is entitled to no weight at all, especially since the Handbook expressly states that it is not to be used as an interpretive device.


The Petition For a Writ of Certiorari was denied on December 13, 2021. Asked by Law360 for a comment, ALF Executive Vice President ^ General Counsel Larry Ebner stated as follows:

“Supreme Court jurisprudence requires courts — including the Ninth Circuit — to apply, not rewrite, unambiguous statutes and regulations, and certainly not defer to a federal agency’s outdated, non-authoritative and contradictory internal staff manual. This would have been an ideal case for the court to reinforce its agency deference jurisprudence.”


For more information, please contact ALF Executive Vice President & General Counsel Lawrence S. Ebner at

Date Originally Posted: September 13, 2021

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