Overtime rule supporters fear Trump administration would turn back clock on wage gains

After a Texas federal judge halted the Obama administration’s overtime rules that would have begun Thursday (Dec. 1), some supporters of the Department of Labor’s new regulations are afraid the Trump administration may turn back the clock on raises for salaried employees working over 40 hours a week.

On Nov. 22, U.S. Judge Amos Mazzant of the U.S. District for the Eastern District of Texas granted plaintiffs in a federal lawsuit an emergency preliminary motion to prevent the U.S. Department of Labor from implementing the new overtime rules. The injunction will remain in place until the courts reach a final decision on their legality.

The DOL issued the final rule that would raise the salary threshold in May from $23,660 to $47,476 a year, under which most salaried workers are guaranteed overtime. DOL officials said the rule would extend overtime protections to 4.2 million additional Americans who are not eligible for overtime under federal law, boosting workers’ wages by $12 billion over the next decade. All employees would have been entitled to overtime if they earn less than $913 a week – including government employees.

The rule also would have automatically updated the salary threshold every three years, to ensure it does not erode under rising wage levels and to make it harder for employers to misclassify workers to avoid paying the overtime pay they have earned.

According to recent analysis by the Washington, D.C.-based Economic Policy Institute, if the courts allow the rule to go into effect it would benefit working people in every state, including 130,000 salaries workers in Arkansas covered under the new threshold. Data from the left-leaning think tank also shows that 30.6% of Arkansas’ salaried workforce will directly benefit from the new overtime rules, pushing the state’s total share of the salaried workforce covered under the new threshold to 44%. Additionally, more than 100,000 people will benefit by getting a job doing the work that overworked people used to do for free.

Ross Eisenbrey, vice president of the left-leaning think tank, believes the federal injunction by Mazzant will likely be overturned.

“It is really poorly reasoned, factually inaccurate opinion that won’t stand up to review,” he said. “This is an extreme and unsupportable decision and is a clear overreach by the Court.”

According to EPI, 12.5 million workers, or 23.3% of salaried workers nationwide, will benefit from the new rules. That includes employees working time-and-a-half pay for any hours worked over 40 in a week, having their hours scaled back to 40 hours a week while still taking home the same pay, or getting a raise to put them above the threshold.
The original lawsuit, led by attorneys general in Texas and Nevada, asked the court to declare the “new overtime rules and regulations are unlawful” because they exceed statutory rights, were enacted “without observance of procedure required by law,” are arbitrary and capricious, and are unlawful as applied to the States and their employees.

The court’s decision was cheered pro-business and national industry trade group, including the National Retail Federal, National Council of Chain Restaurants and the American Trucking Association. In Arkansas, the influential Arkansas State Chamber of Commerce has backed a repeal of the new overtime rules, calling them an “enormous disruption in the workplace.”

DOL SILENT ON RULE DELAY
What is still unclear is how the new rules and court injunction will be handled by U.S. Department of Labor, or under a new Trump administration. Since the court ruling, DOL Secretary Thomas Perez’s office has not issued a statement or advised employers on what to do concerning the rules.

Eisenbrey said the DOL is likely waiting on a response from the Department of Justice before issuing a statement. If the Obama administration defers the decision to President-elect Donald Trump, Eisenbrey and others labor experts fear the new overtime rules may be turned back or dramatically changed.

“I have no idea what they would do,” said the EPI labor expert. “(Trump) ran on the platform of the helping the ‘forgotten worker.” This is exactly who this (overtime rules) help.”

To date, Trump has not announced a nominee to head the Department of Labor. However, Trump has nominated Elaine Chao as Secretary of the Department of Transportation. Chao served as the DOL Secretary under President George W. Bush, where she was frequently criticized by Democrats and labor groups for doing little in the way aiding U.S. workers.

A DOL spokesperson did not respond to a Talk Business & Politics inquiry for comments about the federal court’s decision to extend the grace period on the new overtime rules. However, Attorney Jeffrey Brecher, Practice Group leader of White Plains, N.Y.-based Jackson Lewis law firm, said he expects an appeal of federal court’s decision by DOL “any day now.”

In the weeks ahead of the late November decision, Brecher suggested the U.S. District Court in Sherman, Texas, might bar implementation and enforcement of its proposed new overtime rules because Mazzant was troubled by several parts of the DOL’s regulations.

“It appeared to be a much closer case than originally had been thought,” Brecher said of the decision by Mazzant, an Obama appointee.

POSSIBLE OUTCOMES
But now with a Trump presidency and control of both houses of Congress, legislation repealing the DOL’s final rule has a greater likelihood of success. Still, Brecher said, there are a myriad of scenarios that could happen once the president-elect takes office.

The Long Island attorney said most experts believe the DOL will file an appeal with the Fifth Circuit Court, but a decision may still be pending before President-elect Trump takes office on Jan. 20. If the decision falls to the new president, Brecher said the Trump administration could abandon the appeal or lawmakers could pass new legislation to kill the rule.

Brecher also said the Republican-led Congress could simply pass legislation to “further study” overtime regulation aimed at indefinitely delaying the proposed wage hike for white collar workers.

Brecher, whose firm employs 785 attorneys in 57 offices across the U.S., said employers face different situations depending on how they reacted to the new overtime rules. Businesses that have already communicated and implemented new salaries during the grace period before the effective deadline are in a different position than those who had communicated the changes, but had not already put them in place.

“Those employers will have more flexibility than those who have already implemented it,” he said. “For example, if an employer had already give someone in increase in pay or salary, it would be very difficult from an employee relation perspective to tell that employee their pay is being reduced back to the original level.”

As of Thursday, the DOL had not appealed the injunction by the U.S. District Court in Sherman, Texas.