Next Overtime Rule Battleground: Trump or Clinton Transition

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By Ben Penn

Nov. 2 — Business groups are planning a new strategy to weaken the overtime rule: outreach to the next Labor Department transition team, two lobbyists steering the opposition told Bloomberg BNA.

The DOL regulation to extend overtime pay access to an estimated 4.2 million workers is under attack in court and in Congress, but both avenues are considered long shots at stopping the rule from taking effect Dec. 1. That’s why lobbyists from two retail industry trade associations are hoping that fresh DOL leadership might give their members a renewed chance at relief.

“The first conversation we are likely to have with the next Labor Department is a realistic assessment of whether those rules are necessary or whether they could be slowed down or delayed,” David French, chief lobbyist at the National Retail Federation, told Bloomberg BNA Nov. 1.

His messaging is much more likely to persuade a Donald Trump administration than a Hillary Clinton White House, at least based on both candidates’ campaign rhetoric.

French said it’s “probable” that the NRF would meet with a Clinton DOL transition staff on overtime and other open-ended issues.

Evan Armstrong, who lobbies for the Retail Industry Leaders Association, told Bloomberg BNA Nov. 1 that he’ll be looking to meet with either a Trump or Clinton transition staff to ask them to remove the rule’s provision that updates the salary threshold for overtime exemption every three years, but won’t be focused on having the entire regulation rescinded.

The regulation doubles the salary level to $47,476 per year below which workers are eligible for time-and-a-half overtime pay when exceeding 40 hours in a workweek. Retail is one of the industries expected to see the greatest volume of workers affected by the rule change.

RILA Wants Auto-Escalator Removed

Armstrong was recently named vice president of government affairs at RILA, after a stint as legislative counsel to a congressman leading the legislative battle to halt the overtime rule.

RILA represents primarily large companies, such as big-box retailers, whereas the NRF lobbies for smaller-to-midsize employers. The difference in membership profile is reflected in Armstrong’s and French’s planned outreach strategies.

RILA members, including Wal-Mart Stores Inc., have already begun complying with the rule by lifting manager salaries above the new threshold to maintain their exemption. It would be difficult for retailers to reverse those raises if the next president were to delay or void the rule, Armstrong said.

But removing the triennial updates, which adjust the nationwide salary threshold to inflation in the lowest-earning Census region, would still be beneficial to companies that started complying early, he said.

“I think we would definitely communicate to a transition team that that’s still a problem” and that “there’s room to administratively provide relief on that auto-escalator provision,” Armstrong said.

The pending lawsuit sitting before a federal judge in Texas, meanwhile, asks the court to declare the entire rule unlawful, but also could lead to a judge setting aside only the automatic updates. The U.S. Chamber of Commerce argued in the complaint that the DOL isn’t authorized to permanently raise the salary level every three years without undergoing new notice and comment rulemaking each time.

NRF Concerned About Small Businesses

French declined to provide further details on what the NRF would propose to a new administration to fix the overtime rule. His remarks to Bloomberg BNA about the rule emphasized the small business angle.

While “a lot of large employers are fairly far along, the information gulf for small employers is massive, and I don’t think the Department of Labor has focused on that,” French said. “We’ve got an impending crisis that’s going to hit right after the election.”

He cited survey results showing a substantial share of employers still unaware that the rule takes effect in a few weeks.

The DOL’s Wage and Hour Division officials have been touring the country, providing compliance assistance at live events. The division has also held webinars and posted frequently asked questions on its website, all aimed at getting employers up to speed on their options.

Trump Versus Clinton

Donald Trump has mentioned the potential for a small-business carveout if he were elected president. French wouldn’t say if that’s what he’d propose.

A Hillary Clinton DOL transition team would be hearing from the labor movement about the need to defend the rule and strongly enforce it, several advocates told Bloomberg BNA recently. Clinton applauded the newly expanded overtime protections when the DOL finalized the rule in May.

But business advocates won’t necessarily assume a Clinton win next week would render their arguments moot.

“Change always allows for an opportunity to have a new conversation, even from a Democratic to a Democratic administration,” French said. “Focus is going to be different, points of emphasis are going to be different, some of the people are going to be different, I don’t know how all of that is going to play out.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com

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