Many employers have asked about the potential impact of the election of Donald Trump on the status of the new overtime pay regulations under the Fair Labor Standards Act (FLSA), which essentially double the minimum salary for most white-collar exemptions to $913 per week (equal to $47,476 annually). While President-elect Trump is expected to pursue policies that are more business-friendly than those of President Obama, employers still need to be prepared to meet the overtime rule’s compliance deadline of December 1, 2016.
Current Status of the Rule
The new administration does not take office until January 20, 2017, 50 days after the new regulations go into effect. The current Department of Labor (DOL) is not likely to delay enforcement of the new rule beyond December 1. President Obama considers the revised regulations, which are having the practical effect of raising wages for many workers, to be an important part of his legacy. Even if the DOL did not pursue enforcement, the increased minimum salary for overtime-eligible employees will be the law of the land as of December 1 and at that point businesses that are not in compliance will be subject to legal action for violating the FLSA.
Recently two lawsuits were filed in federal court in Texas seeking to enjoin the overtime rule. The cases have been combined and a hearing is scheduled for this Wednesday, November 16. If the litigation results in the new regulations being put on hold, we will let you know; however, that is not a widely expected result.
Potential Changes in the New Administration
Upon taking office, the new president is expected to repeal some of President Obama’s executive orders. The overtime rule, however, is not an executive order; rather, it is a regulation that went through the time-consuming notice-and-comment rule-making process, so it cannot be undone with the stroke of a pen. Instead, the new DOL would be required to complete the same process if it wished to modify the rule, which could take at least several months to complete.
Alternatively, sometime in 2017, Congress may pass, and then-President Trump may sign, legislation that amends the FLSA in a manner that affects the new overtime rule, potentially including, for example, a provision that phases in the new minimum salary over a few years, especially for small businesses. By then, however, employers will already have been required to make the classification changes and/or pay increases needed to comply with the new regulations. Also, since Donald Trump’s victory has been attributed in large part to support among working-class blue-collar voters, he may be reluctant to significantly roll back the overtime rule.
For these reasons, employers should continue to plan on being in compliance with the new FLSA regulations by December 1, despite the results of the election. In the meantime, if you have any questions about FLSA compliance, please contact any member of Nexsen Pruet’s Employment and Labor Law group.