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Overtime pay regulations enter uncertain period

Overtime pay regulations enter uncertain period

While the Fair Labor Standards Act wage-and-hour regulations that double the salary threshold at which white-collar workers are entitled to overtime pay will still go into effect Dec. 1, what action — if any — the Trump administration may take to change them remains unclear, experts say.

“We’re entering a time of great uncertainty relative to these regulations,” said Margaret Carroll Alli, a shareholder with Ogletree, Deakins, Nash, Smoak & Stewart P.C. in Birmingham, Michigan. 

The wage-and-hour division of the U.S. Department of Labor has made it very clear it “is not backing off of the new regulations and it intends to follow through with enforcement of them,” she said. 

Meanwhile, a U.S. District Court judge in Texas is expected to rule Tuesday on whether to issue a preliminary injunction halting the regulation’s implementation.

The new threshold is $913 a week or $47,476 annually for a full-time employee, compared with the current $455 a week or $23,660 annually. 

Experts say to prepare for the new regulations, which impact an estimated 4.2 million workers who are now exempt, employers in part have responded by raising workers’ salaries so they remain exempt.

The final rule also includes a mechanism to automatically update the standard salary level requirement every three years.

Experts say it is still unclear whether the Trump administration will try to negate all or part of the regulation. If it does decide to make change, it would have to go through a process of introducing new regulations, “and that process will take some time,” said Ms. Alli. “It’s not a flip of the switch,” she said. 

She added while President-elect Donald Trump would have the authority to issue an executive order, “it’s uncertain whether it could be used in this context.”

“Obviously, one of the factors is whom he’s going to appoint as Secretary of Labor” and that person’s priorities, said Kevin LaCroix, executive vice president of RT ProExec, a division of R-T Specialty L.L.C. in Beachwood, Ohio. He said one possibility is the new secretary will choose to focus on the automatic escalator clause.

Another is that the Trump administration will make changes that affect how the regulations impact only small businesses and nonprofits, said David E. Dubberly, a member of Nexsen Pruet L.L.C. in Columbia, South Carolina.

“People close to President-elect Trump have said that it’s their main concern,” Mr. Dubberly said. They have also said “it’s not a priority for them to do away with the new minimum salary now,” although “I’m sure they’ll get an earful from people who complain” that moving the minimum salary from $23,660 to $47,476 “was too drastic a change,” he said.

Experts also note that employers that have already increased their workers’ salary so they become exempt from overtime are not going to want to turn around and then reduce those salaries, even if the entire regulation is nullified.

“Even if the Trump administration comes out with a new regulation — which would take months to do because of procedural requirements — or Congress comes up with a new rule to make changes in this area, it would be very difficult for employers to go to employees” to whom they gave raises and decrease their salaries, Mr. Dubberly said. “That’s not going to happen in the real world,” he said.

Meanwhile, two lawsuits objecting to the regulations were consolidated in October. They were filed by the Washington-based U.S. Chamber of Commerce on behalf of more than 50 other groups and by Nevada Attorney General Adam Paul Laxalt on behalf of a coalition of 21 states in U.S. District Court in Sherman, Texas.

Judge Amos L. Mazzant III has promised to rule on whether to issue a preliminary injunction on the issue by Tuesday. Experts say they believe that rather than delaying implementation of the entire regulation, Judge Mazzant is more likely to rule on just the escalator clause.





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