Opinion ID: 78464
Heading Depth: 3
Heading Rank: 2

Heading: The De Minimis Exemption and Annual Threshold for Reporting

Text: Warshauer argues that the Secretary's advisory addressing the de minimis exemption and setting a $250 threshold for reporting requires notice and comment rulemaking because it imposes new reporting duties and is inconsistent with the Department of Labor's prior applications of the de minimis exemption. The Secretary argues that the advisory does not require notice and comment because it is an interpretive rule. In 1963 the Department published the Instructions to the Form LM-10. The Instructions exempt sporadic or occasional gifts, gratuities, or favors of insubstantial value from § 203(a)(1) reporting obligations. The Department did not fix dollar amounts to define insubstantial value, instead choosing to follow a subjective approach to the exemption. In 2005, the Secretary changed this subjective approach to an objective standard  $250 for everyone. The Secretary's rule is interpretive. The advisory informs the public about the agency's current view of insubstantial value in its application of the de minimis exemption; in other words, it merely clarifies how the Secretary intends to enforce the long-standing exemption to the reporting requirement. It does not create any new law, right, or duty, but rather provides guidance as to how the Secretary will exercise her enforcement discretion. That the rule contains a numeric value does not prevent it from being an interpretive rule. While a rule that turns on a number is likely legislative because it is an arbitrary choice among possible methods of implementing a statute, not every rule with a numeric component is legislative. Hoctor, 82 F.3d at 171 (We are not saying that an interpretive rule can never have a numerical component, as the use of a number as a rule of thumb to guide the application of a general norm will often be legitimately interpretive.). Here, the Secretary interpreted the phrase insubstantial value as $250 or less. Her decision not to enforce the statute against those who make only such trivial payments is within her discretionary power. Warshauer is incorrect in claiming that the advisory imposed new reporting duties. On the contrary, such duties derive from the statute itself; the advisory simply provides additional guidance. That the Secretary has informed the public of her judgment does not render the rule legislative. Furthermore, contrary to Warshauer's assertions, the Secretary's change in position on what constitutes insubstantial value does not trigger notice and comment procedures. [S]o long as a new guidance document can reasonably be interpreted as consistent with prior documents, it does not significantly revise a previous authoritative interpretation. MetWest, 560 F.3d at 510 (internal quotations omitted). Although the Secretary has set and altered the numerical value of the de minimis threshold, the Secretary's advisories may be reasonably interpreted as consistent. There has been no significant departure from or revision of the policy of exempting gifts of insubstantial value. Accordingly, since the Secretary's advisory setting a $250 threshold is an interpretive rule, the district court did not err in holding that the Secretary was not required to engage in notice and comment rulemaking.