Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
By Ben Penn
Nov. 9 — Donald Trump’s victory leaves more questions than answers about how he will operate the Labor Department, but the lengthy list of workplace regulations finalized in the past year is now in jeopardy.
“Under the dead category you can put persuader and Fair Pay Safe Workplaces,” Christopher Wilkinson, a partner at Orrick Herrington & Sutcliffe in Washington, told Bloomberg BNA Nov. 9. Wilkinson was the DOL’s associate solicitor until 2015.
In that role, Wilkinson provided legal advice on the persuader rule, which expands disclosure requirements for employers that use advisers to help fight unionization drives, and on the Fair Pay and Safe Workplaces executive order. The order requires federal contractors to report labor violations.
Those regulations were on tenuous ground even before the election because judges have already issued preliminary injunctions to halt them. They could be more easily removed when the Republican president-elect takes power, Wilkinson said. Or Trump’s Justice Department may opt to drop its defense of the rules in court.
The future of the agency’s landmark overtime regulation, which takes effect Dec. 1, is far more complicated. The Wage and Hour Division’s ability to start enforcement before Trump takes office means employers that already began complying could be reluctant to undo salary adjustments in the event the regulation is repealed.
The rule, which doubles the salary level under which employees are entitled to overtime, is expected to make some 4.2 million workers eligible for time-and-a-half pay. It was one of the top priorities on President Barack Obama’s middle-class agenda, and critics are now re-energized in their attempts to provide employers with relief.
A federal judge will hear arguments at a hearing in Texas Nov. 16 on whether to issue a preliminary injunction freezing the rule before it can take effect. But failing that, Trump’s win still has business advocates considering whether to push for change through the appropriations process, Congressional Review Act or new rulemaking.
“It’s a real challenge because our members are complying with the law, and it goes into effect well before President Trump takes office. It’s a real head scratcher,” Matthew Haller, senior vice president for communications and public affairs at the International Franchise Association, told Bloomberg BNA Nov. 9. “The inclination is that Trump is going to throw it out, but you still have to comply.”
“I don’t know any employer who wants to go back to their employees and say ‘just kidding,’” Haller said.
The Obama administration wanted to ensure that the rule would begin applying before a new president assumes office.
“That’s the intent of doing it the way they did it—the very fact that you would have to tell 4.2 million Americans who are getting overtime that they are now no longer eligible for overtime,” Wilkinson said. “That was the goal.”
Lobbyists for retailers will be asking the Trump transition team to at the very least remove the provision of the rule that indexes the salary threshold every three years with inflation.
The president-elect has called for repealing many Obama administration regulations but hasn’t said if overtime would be included. Even if Trump does try to remove the rule entirely, the process isn’t as simple as the campaign rhetoric might suggest.
“It’s not like it can just be ‘oh yeah, we changed our mind,’” Randy Johnson, senior vice president for labor, immigration and employee benefits at the U.S. Chamber of Commerce, told Bloomberg BNA Nov. 9. “The new administration would have to suspend the regulation, go through rulemaking to repeal it and take public comments before they make a decision. They have to provide a reasoned an analysis as to why they would repeal it.”
Judy Conti, federal advocacy coordinator at the National Employment Law Project, has been a strong supporter of the overtime rule. NELP “absolutely” will be asking to meet with Trump’s labor transition team and isn’t resigned to the fact that the worker advocacy agenda would fall on deaf ears, she told Bloomberg BNA Nov. 9.
“The coalition that he put together that successfully won him the presidency revolves around a lot of people who are deeply economically scarred from the choices we have made the past few decades, whether it be around trade or wages,” Conti said. “There’s a lot that we can do together to give people better economic stability.”
The pitch on overtime to Trump’s DOL would be that broader overtime access is needed to update outdated rules that are “rigged against the average worker,” she said.
But employers have said the rule hurts hiring and that many small businesses still aren’t ready to comply. Several bills to delay or stop the overtime rule are pending before Congress and could get considered in the lame-duck session, but they all face a certain veto from the president. In the next Congress, Trump would be more likely to sign off.
In addition to considering which Obama regulations to revise, the Trump DOL review team must find a replacement for Thomas Perez as labor secretary.
Potential nominees mentioned thus far include Victoria Lipnic, who was assistant secretary of labor for employment standards under President George W. Bush and is now commissioner of the Equal Employment Opportunity Commission, and Andrew Puzder, chief executive officer of CKE Holdings, which operates Hardee’s and Carl’s Jr. But the selection will hinge in part on who gets tapped for higher-profile Cabinet posts.
The employer community will be looking for a labor secretary to undo what they view as a heavy-handed, aggressive approach under Obama and Perez.
Wilkinson, who also worked in a regional DOL solicitor’s office under Bush, anticipates a return to the agency’s past.
“Trump just hasn’t paid a lot of attention during the election” to the DOL, he said. “So this is one where you can have a giveback to the traditional Republicans.” That means less aggressive legal and enforcement approaches and more scrutiny into alleged union corruption.
The Occupational Safety and Health Administration has regulations, all recently enacted, for silica, drug testing, incentive programs and record keeping that the Trump administration may review, said former agency administrator Edwin Foulke.
Foulke is an attorney with Fisher & Phillips LLP in Atlanta who served in the second term of the Bush administration.
The first OSHA policies likely to come under scrutiny are various directives and interpretations the agency issued during the Obama administration, Foulke told Bloomberg BNA Nov. 9.
To contact the reporter on this story: Ben Penn in Washington at firstname.lastname@example.org
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