public policy

Overtime Rule Update

 

December 1, 2016 is rapidly approaching and there have been several developments concerning the Overtime rule since Election Day 2016.  In light of a Trump Administration and a Republican controlled Congress there has been much speculation on the future and implementation of the Overtime Rule.  Below is the most current information on delaying or changing the Overtime rule.

Trump Administration/Executive Action

The Overtime Rule is a final rule (not an Executive Order) and cannot be immediately revoked by an incoming president.  Additionally, the Obama administration carefully planned the publication and implementation dates to avoid the use of the Congressional Review Act.  The Congressional Review Act is a rarely used tool that enables Congress to review regulation within a specific time frame and potentially issue a resolution of disapproval, which is not available for the Overtime rule.

The executive branch will have the option to alter the rule through the normal rule making process pursuant to the Administrative Procedures Act, but that will likely take several months if not more to go through the required notice and comment period.

Lastly, During the Campaign President Elect Trump supported delaying implementation and carving out a small business exemption but did not comment further.  It is unclear how strongly Mr. Trump feels about the overtime rule in it’s entirety considering his unexpected but strong support from labor in northern states.

Legislative Action

The rule is set to go into effect on December 1st while President Obama remains the President until January 20, 2017.  Several pieces of legislation, supported by NPMA, have been introduced in both the U.S. Senate and U.S. House of Representatives.  The bills range from delaying implementation, phasing-in implementation, eliminating the triannual indexing to a complete elimination of the rule all together.  President Obama has signaled he would veto any legislation that would delay or alter the Overtime rule, which was a top priority of his administration.  After Mr. Trump is sworn-in there is a greater probability that legislative fixes can be made, but there is still a democratic filibuster obstacle depending on what is proposed.  A phase-in, slight delay or exemption for small businesses could garner bi-partisan support in the 115th Congress.

As for defunding implementation of the rule through the appropriations process, that wouldn’t impact the fact that those in violation of the regulation after December 1, 2016 could be subject to liability to their employees. 

Courts

Earlier this year two separate groups brought claims in Federal Court against the Department of Labor to block implantation of the Overtime Rule.  The groups consist of 21 states and a combination of industry groups lead by the U.S. Chamber of Commerce.  The two claims were consolidated in October and on Wednesday November 16th a federal judge for the U.S. District Court for the Eastern District of Texas heard arguments on a motion made by the States and Business Groups for a preliminary injunction to delay implementation on the final rule until the case reaches a final judgment.  The judge signaled a determination on the preliminary injunction will be made on November 22nd and if the preliminary injunction is not granted an additional hearing will ensue on November 28th.   Burdens on the moving party to prove the granting of a preliminary injunction are high and at this point it is unclear how the judge will rule. 

Conclusion

NPMA is working with the Partnership to Protect Workplace Opportunity to push for executive and legislative adjustments to the final rule and we are closely monitoring the judicial activity.  Because we are unable to confirm any outcome prior to December 1st, NPMA encourages all employers to be prepared to implement policies in compliance with the new overtime threshold of $47,476 the week of December 1, 2016.  Overtime is calculated on a weekly basis and because December 1st is a Thursday employers should be prepared to have any new necessary payroll policies in place beginning Monday, November 28th.  If you have additional questions concerning the overtime rule please contact the Public Policy team.