Trump Administration Plans to Rewrite Overtime Rule

Trump Administration Plans to Rewrite Overtime Rule

President Donald Trump’s administration said in a court filing last week that it intends to rethink the controversial new US overtime rule developed by the previous administration last year, the Washington Examiner reports:

Justice Department lawyers … defended the prior administration from charges that it violated the Administrative Procedures Act, which covers federal rulemakings, but also said the current administration would rethink the rule.

“The department has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be. Accordingly, the department requests that this court address only the threshold legal question of the department’s statutory authority to set a salary level,” the lawyers stated. Restarting the public question process is a prerequisite before the department can overturn it and establish a new threshold. The Justice Department did not indicate what the administration thought the new level would be.

In the new rule drafted in the final year of Barack Obama’s presidency, the Labor Department had sought to raise the salary threshold at which employees are exempt from overtime pay from $23,660 to $47,476, but the new rule was challenged in court, blocking its implementation and keeping it tied up in litigation until the White House changed hands in January. Trump himself did not stake out a firm position on the rule during last year’s presidential campaign, but his Labor Secretary Alexander Acosta touched on it in his confirmation hearing, saying that the threshold was overdue for an update but expressing concern that doubling it all at once would put undue stress on the economy.

If it resembles the proposals made by Republican lawmakers, the administration’s rewrite of the rule will likely include a lower threshold and/or phase in the increase over a number of years, and may also be more flexible with regard to the “duties test” that also determines whether a role is managerial in nature and thus exempt from overtime. In addition, Republicans in the US Congress have put forth a bill that would enable organizations to offer employees 1.5 hours of compensatory time off (“comp time”) for each hour of overtime they work, instead of time-and-a-half pay.

However, some states (particularly those with Democrat-dominated governments) are moving ahead with regulatory changes of their own, in many cases based on the Obama administration’s rule. New York adopted a higher salary threshold at the beginning of this year, and similar measures are being considered in California and a number of other “blue states”. Furthermore, many employers who have already taken anticipatory steps to comply with the new rule, such as raising certain employees’ salaries to put them over the new threshold, may be reluctant to reverse these changes: Walmart, Kroger, Wendy’s, and a number of other major employers have said they would keep these raises in place, preferring the increased payroll costs to the damage to morale and employee engagement that would come from rescinding them.