The Trump White House recently instructed federal agencies to freeze all pending regulations. This action appears to include a number of labor and employment rules initiated under the Obama administration.
The Trump administration recently indicated that it was not favorable towards allowing former President Obama's expanded update of federal overtime pay rules. This was underscored by a court filing indicating that it may withdraw a White House appeal of a federal court's recent invalidation of the so-called Final Rule.
In it's filing with the 5th Circuit Court of Appeals, the Justice Department noted,
"The federal government respectfully requests a 30-day extension of time, to and including March 2, 2017, in which to file its reply brief. The requested extension is necessary to allow incoming leadership personnel adequate time to consider the issues."
Because of President Trump's choice of fast-food businessman Andrew Puzder to head the Labor Department, many observers believe It is highly unlikely the administration will support the rule. Puzder has been highly critical of the Obama administration's labor agenda.
In on op-ed for Forbes magazine, Puzder said,
"As with the Obama administration's other efforts to regulate their way to economic prosperity, it will not deliver as promised. ... Turning highly sought-after entry level management careers into hourly jobs where employees punch a clock and are compensated for time spent rather than time well spent is hardly an improvement on the path from the working class to the middle class."
A number of business groups, several states, many lawmakers and nominee Puzder have all criticized the rule since it's announcement in May 2016. One of the stated concerns is that doubling the salary threshold for determining worker's overtime eligibility will inevitably increase payroll costs and pressure many employers to cut jobs.
In addition, they claim that by setting the threshold too high, the DOL is making it impossible for employers and employees to set flexible work schedules. Complicating the issue even further is that many businesses have already made changes to their pay structures in order to comply with the new rule.
The Languishing Final Rule
The rule, which was published in final form and scheduled to take effect December 1, 2016. would have made approximately 4 million workers eligible for overtime pay. This was before a federal judge in Texas put it on hold late last year. The judge said the DOL had exceeded its authority by focusing on how much money an employee earns as opposed to tasks the worker performs in determining overtime eligibility.
In an article in The Washington Examiner, Diana Furchgott-Roth, senior fellow at the Manhattan Institute and a member of the Trump administration's transition team on labor policy, noted that the new administration still has hoops to jump through before the rule can be irrevocably killed.
"In order to properly get rid of the overtime rule, the administration has to request that the 5th Circuit drop the appeal of the prior administration. Then, it needs to clean up matters by proposing to rescind the overtime regulation and publishing a final rule rescinding it," Furchgott-Roth said.
For now, business owners and employees will have to "wait and see" if the court will eventually allow the rule - or a modified version of it - go into effect. The Trump administration, on the other hand, does have other options.
Paul DeCamp, a Jackson Lewis partner, ran the DOL’s Wage and Hour Administration during the George W. Bush administration. Speaking with Bloomberg BNA he noted that,
“The new administration can, if it chooses, abandon the appeal of the preliminary injunction and amend the answer to admit that the regulation violates the law, thereby potentially ending the litigation with a permanent injunction in place preventing the final rule from going into effect."
The tenor and tone of recent statements and actions by the Trump presidency has been seen by many as an indication that the Final Rule is unlikely to come to pass.
Keeping Up With Labor Laws
Many new regulations expand the potential of risk for employers, require new workplace postings, or mandate changes to existing workplace policies. We recommend that all employers consult with experienced employment counsel to ensure compliance.
Accurate and timely management and compliance practices are required for every business and every payroll professional. But there are options.
Accuchex, a reputable payroll management services provider, can not only relieve you of the burden of your ongoing payroll process demands, but can potentially prove to be a more cost-effective solution, as well.
Click this link o get your free download of our Payroll Outsourcing Guide. Or click the button below to learn what you need to know about labor law in California. For more information, feel free to call Accuchex Payroll Management Services at 877-422-2824.