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The ferment that President Barack Obama’s Labor Department generated on wage-and-hour issues is likely to die down under the Trump administration, management-side attorneys say.
The Trump administration is likely to pull support for the increase in the upper threshold for overtime pay proposed under Obama, causing it to “die a natural death,” Bob Kilroy, a partner in management-side law firm Mirick O’Connell, told Bloomberg BNA Jan. 17.
The DOL had finalized a rule in May that doubled the annual salary threshold below which workers are entitled to overtime—to $47,476 from $23,660. Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas Nov. 22 granted a motion by 21 states to temporarily halt the Labor Department’s overtime rule ( Nevada v. DOL, E.D. Tex., No. 4:16-cv-00731, motion granted 11/22/16). He found that the Fair Labor Standards Act doesn’t give the DOL authority to create a salary test for overtime exemption. The DOL appealed this decision to the Fifth Circuit.
The “good news” is a majority of the judges on that appeals court were appointed by Republican presidents, but the “bad news” is that they granted the expedited hearing the DOL requested, Tammy McCutchen, principal at employer-side law firm Littler Mendelson and vice president of strategy for ComplianceHR, said Jan. 17. McCutchen was an administrator of the Labor Department’s Wage and Hour Division under President George W. Bush.
Both Kilroy and McCutchen said that the DOL could stop pursuing the appeal under a Trump secretary of labor, such as his controversial appointee, Andrew Puzder, or that it could begin a new rulemaking process. Kilroy said a new rulemaking could take 18 months.
The outcome of such a rulemaking could be a more “reasonable” threshold of $35,000 to $38,000 a year, McCutchen said.
Meanwhile, McCutchen said, the “earliest decision possible” in the ongoing legal case would come in March or April. Mazzant is considering making his injunction permanent, and the AFL-CIO has requested to intervene if the Trump administration refuses to defend the rule, which, she noted, would result in retaining the status quo, $23,660 level.
A final possibility Kilroy mentioned would be for Congress to amend the FLSA itself, but he said that’s “not likely” and that the entire issue is likely to be relegated to “the back burner” during Trump’s first 100 days in office.
That doesn’t mean employers should rest completely easy, McCutchen warned. “I think we’ll see some relief on overtime, but I don’t think it’s reasonable for employers to say that under Trump, we don’t have to worry about compliance” on wage-and-hour issues, she said.
McCutchen expects a change of emphasis in WHD enforcement, including a refocus on employee complaints, a reduction of “targeted initiatives” on given industries and geographical areas, and an end to “abusive investigation practices” such as DOL officials showing up with no notice or less than 24 hours’ notice and demanding that employers produce documents in less than 72 hours.
The “new DOL,” McCutchen predicted, will be “more willing to negotiate over back remedies and settle for two years’ back wages. “Republicans do enforce; after all, we are the law-and-order party.” She also predicted an increase in back wages collected by the DOL under the Trump administration.
McCutchen said she is “pretty skeptical” anything will happen before Puzder’s confirmation, which, according to her latest information, will happen in mid-February despite opposition from what she called “the usual suspects,” such as Democrats, unions and “disgruntled employees” of Puzder’s CKE Restaurants Inc. Other posts won’t be filled until later, she said.
McCutchen also predicted:
Kilroy also predicted that:
Regardless of which way the political wind is blowing, employers should still keep a clean nose on wage-and-hour compliance. McCutchen said the top 10 compliance failures employers should look out for are, in reverse order:
McCutchen was speaking Jan. 17 in a webinar sponsored by Littler.
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