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Incoming Trump administration likely to change overtime rule

Incoming Trump administration likely to change overtime rule

The U.S. Department of Labor’s overtime rule, whose implementation was halted with a temporary injunction by a U.S. District Court judge in November, is expected to disappear in its current form with the Trump administration in office, barring judicial action.

A modified version of the overtime rule may ultimately be approved, though, through either regulation or legislation, say experts.

The Department of Labor is expected to withdraw from the litigation surrounding the overtime rule with President-elect Donald Trump’s inauguration on Jan. 20, and it is unclear whether a union effort to replace the department as a defendant in the case will be successful.

 The overtime rule would have raised the threshold for overtime exempt employees to $913 a week, or $47,476 annually for a full-time employee, compared with the current $455 a week, or $23,660 annually.

On Nov. 22, Judge Amos L. Mazzant III of U.S. District Court in Sherman, Texas, issued a preliminary injunction halting the rule’s Dec. 1 implementation. The Department of Labor then filed an appeal with the 5th U.S. District Court of Appeals in New Orleans, asking for an expedited briefing schedule in the case.

The appeals court issued a schedule calling for briefs in the case to be submitted by Jan. 31, which means oral arguments in the case would not be heard before Mr. Trump’s inauguration. 

Mr. Trump’s selection for Department of Labor Secretary, Andrew Puzder, criticized the rule in an article in Forbes magazine in May, and it is expected that the DOL will not pursue the case.

On Dec. 9, the Austin-based Texas AFL-CIO filed a motion to intervene in the case as a defendant, which means it could replace the Department of Labor as a defendant should the department withdraw. The District Court has not yet ruled on this motion.

Speaking before the AFL-CIO filed its motion, Robin E. Shea, a partner with Constangy, Brooks, Smith & Prophete L.L.P. in Winston-Salem, North Carolina, said if the case is not heard before the inauguration, “I wouldn’t be surprised at all to see the new Department of Labor just withdraw the appeal, which would leave the lower court decision in place, and then the Republicans in Congress could do whatever they need to do.”

Alternatively, “The Puzder DOL could start a new rule-making process, and either go back to what we had before or maybe modify what we had before, but it wouldn’t be anywhere near as dramatic as the regulation currently on appeal.”

There has been some commentary that it would be inappropriate for the AFL-CIO to step in while the Department of Labor is defendant in the case, said Richard R. Meneghello, a partner with Fisher & Phillips L.L.P. in Portland, Oregon. 

But at the first indication that the DOL opposes the rule, either the AFL-CIO or another employee advocate group could step in and defend it, he said.

In addition, Mr. Trump, who has a populist orientation, may be reluctant to interfere with a rule that would impact more than 4 million workers and seek to have it either reinstated or adjusted so it is more “palatable,” said Mr. Meneghello. Another possibility is legislation, he said. 

The Overtime Reform and Review Act, for instance, which was introduced in September by Republican senators including Senate Labor Committee Chairman Lamar Alexander, R-Tenn., proposed stretching the increase in the salary threshold to a five-year period.

Before Judge Mazzant’s ruling, many employers had already prepared for the rule’s implementation by in some instances raising employees’ salaries so they continued to be exempt, or by planning to introduce such changes by Dec. 1.

Separately, the New York State Department of Labor has proposed raising the overtime threshold, which is now $675 per week or $35,100 annually in the state. The new thresholds would vary based on location and employer size. The proposed regulation has an enactment date of Dec. 31, but the final regulation has not yet been issued.

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