As employers are all aware, the U.S. Department of Labor (DOL)’s new overtime rules are set to take effect Dec. 1, 2016. The rule, projected to cover some 4.2 million workers, will raise the minimum salary threshold for overtime exemption 101 percent from its current rate of $455 per week to $913 per week.
The threshold for highly compensated employees will increase as well, from the current annual salary of $100,000 to $134,004. The rule provides for an automatic updating feature, which will update these numbers every three years to reflect economic fluctuations over time. This is the first time the overtime rules have been changed since 2004. For more details, see our previous blog post here.
The impact on employers is projected to be significant. The DOL has estimated that workers across the country will receive an aggregate pay increase of $1.2 billion per year, with direct costs to employers totaling $295 million for the first 10 years. Looking at these numbers, it is not surprising that employers nationwide are wary of the change and are asking whether the new White House administration will have any effect on the new overtime rule.
What will Trump do?
President-elect Donald Trump has stated that he would favor exempting small businesses from the new overtime rule, and the Trump administration has indicated that wage and hour regulations may experience some overhaul. The DOL’s new overtime rule could be changed through rulemaking, a lengthy process that generally involves submission of a proposed rule, publication for public comment during a period ranging from 30 to 180 days depending on the complexity of the rule, and then integration of comments to reach the ultimate final rule. This entire process can easily last a year or more.
Could Trump simply outright prevent the new overtime rule from taking effect? Because the rule will go into effect before the official administration change, the answer is no. There is little the Trump administration can do to change the new overtime rule before the president-elect is inaugurated in January 2017.
Other potential impacts
Notably, there is pending legal action on efforts to block the DOL from enforcing the overtime rule. On Nov. 16, U.S. District Judge Amos Mazzant of the Eastern District of Texas stated that on Nov. 22, he will decide whether to grant the injunctive relief sought by the 21 states who filed suit against in September to block it (see previous blog post here).
Ultimately, employers are advised to continue taking measures in order to fully comply with the new overtime rule. Until further notice, the regulations will go into effect on Dec. 1, 2016, as scheduled. We are closely tracking the status of the rule and will keep readers updated on any changes as the effective date draws near.