Trump Freezes Overtime, Pay Data Regulations

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By Chris Opfer

White House Chief of Staff Reince Priebus Jan. 20 instructed federal agencies to freeze all pending regulations, a move that seems to include a number of labor and employment initiatives that were in the works under the Obama administration.

Priebus told the agencies to hold off on sending new regulations to the Office of Management and Budget and to postpone for at least 60 days all regulations that have been published but haven’t yet taken effect. He also encouraged agencies to “consider potentially proposing further notice-and-comment rulemaking” for any regulations that have been held up over legal questions.

The move appears to put the Labor Department’s overtime rule on ice, along with regulations to expand federal contractor disclosure requirements and require employers to provide information about union-busting “persuader” activities. It may also pause new pay data disclosure requirements set to be put in place by the Equal Employment Opportunity Commission.

The overtime, contractor disclosure and persuader rules were already on hold, pending the outcome of court battles. The EEOC pay data requirement was set to go into effect in March 2018.

The freeze is common among incoming administrations. It starts the ball rolling on President Donald Trump’s promise to roll back a wide range of regulatory red tape for businesses. Management-side attorneys and lobbyists said additional delays may be coming as the Trump administration decides which mix of executive orders, new regulations and legislation to use to try to undo his predecessor’s labor agenda.

“While the effort is most welcome, I would not be surprised if additional delays take place,” Michael Lotito, co-chair of Littler Mendelson’s Workplace Policy Institute, told Bloomberg BNA. Lotito added that he’d like to see regulations frozen until Trump’s labor secretary pick and other DOL leadership positions are filled.

A Trump administration spokeswoman didn’t immediately respond to Bloomberg BNA’s request for comment.

Lawsuits Complicate Regulations’ Fates

Some worker advocates are already arguing that the freeze letter doesn’t apply to regulations such as the pending overtime rule (RIN:1235-AA11), which was published in final form and scheduled to take effect last month. The rule was expected to make some 4 million workers newly eligible for time-and-a-half pay before a federal judge in Texas put it on hold late last year.

The overtime rule is in a “weird posture” because it was supposed to be effective last December, Judy Conti, federal advocacy coordinator at the National Employment Law Project, told Bloomberg BNA.

“The resolution of the lawsuit will ultimately determine when or if the regulation becomes operative, but the effective date is clearly Dec. 1,” Conti said via e-mail. “We’ll have to wait and see how this all plays out.”

Business groups, a swath of mostly Republican lawmakers and labor secretary nominee Andrew Puzder have roundly criticized the rule. Their chief complaint is that doubling the salary threshold under which workers are automatically eligible for overtime will drive up payroll costs and force many employers to cut jobs.

The problem is that many businesses have already made changes to their pay rates to comply with the new rule. Some Republicans have suggested that they would support a smaller eligibility increase, but it’s not clear whether that might be done through legislation or by the DOL withdrawing the rule and issuing a new one via the notice-and-comment process.

The Texas judge said the DOL exceeded its authority by focusing on how much money a worker makes instead of the tasks the worker performs to determine overtime eligibility. That’s raised some questions about whether the department has the authority to set a salary threshold at all, or if that’s a job for Congress.

“The new administration can, if it chooses, abandon the appeal of the preliminary injunction and amend the answer to admit that the regulation violates the law, thereby potentially ending the litigation with a permanent injunction in place preventing the final rule from going into effect,” Jackson Lewis partner Paul DeCamp told Bloomberg BNA. DeCamp ran the DOL’s Wage and Hour Administration during the George W. Bush administration.

The persuader rule (RIN:1245-AA03) and rules and guidance to implement federal contractor disclosure obligations (EO 13,673) are also in similar limbo. A judge in Texas permanently enjoined the department from implementing the persuader rule, and the DOL is appealing a separate court decision to temporarily pump the brakes on the contractor disclosures.

The Trump White House may target the contractor disclosures with a new executive order.

A Labor Department spokesman didn’t immediately respond to Bloomberg BNA’s request for comment.

Pay Data on Chopping Block

The EEOC’s pay data disclosure rule (RIN:3046-0007) also appears headed for the scrap heap.

The new disclosure requirements, first unveiled in an executive order from former President Barack Obama, would require employers to disclose summary compensation data grouped by sex, race and ethnicity. They were intended to make it easier to root out pay discrimination, but critics said the new requirements would create more paperwork for employers and wouldn’t be effective.

“I will be very interested to see what EEOC does about that,” Reed Russell, who served as the commission’s legal counsel during the George W. Bush administration, told Bloomberg BNA of the pay data rule. “It’s pretty burdensome and questionable in how it will help carry out the EEOC’s mission.”

EEOC spokeswoman Justine Lisser declined to comment for this story.

To contact the reporter on this story: Chris Opfer in Washington at copfer@bna.com

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

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