President-Elect Donald Trump vowed, if elected, to “drain the swamp” in Washington, D.C. As part of that effort, Trump promised that he would undo many of the regulations enacted during President Obama’s eight years in office. With a Republican in the White House and Republicans controlling both the House and the Senate, the climate is ripe for Trump’s de-regulation promises to become a reality. One regulation likely to be targeted by President-Elect Trump – at least in part – is the Department of Labor’s (DOL’s) revised overtime rule, set to become effective December 1, 2016.
The overtime rule more than doubles the exempt salary threshold under the Fair Labor Standards Act (FLSA) from $455.00 weekly ($23,660 annually) to $913.00 weekly ($47,476 annually). Thus, beginning December 1st, employees making less than $913.00 per week (unless specifically exempted) must be paid time-and-a-half for any hours worked over a standard 40-hour week. The impact is not insignificant. It is estimated that over four million workers who previously would have been exempt will receive overtime pay under the revised law.
President-Elect Trump’s anti-regulation stance is no secret. He believes that fewer regulations will spur economic growth. Nevertheless, a whole-sale undoing of the overtime rule may not be in the cards. First, on the campaign trail, Trump did not cite the rule as a priority. When asked about it, he seemed to advocate for a small business exception to the rule, rather than doing away with the rule in its entirety. Second, given Trump’s higher priorities – like repealing and replacing the Affordable Care Act – he may not wish to use his political capital on this issue. Third, rolling back the overtime rule may be unpopular among Trump’s working-class supporters. Thus, rather than getting rid of the rule in its entirety, it is likely that President-Elect Trump will strike a middle-ground by phasing-in gradual salary threshold increases over time, carving-out a comprehensive exception for small businesses, or undoing that portion of the rule that requires the salary thresholds to increase automatically every three years.
Whatever changes may be on the horizon, absent success in the pending lawsuit that has been brought by twenty-one states and various business groups against the DOL seeking to enjoin implementation of the rule, nothing is likely to happen before the December 1 effective date. Thus, for now, the only prudent course is for employers to continue taking action to ensure that they will be in full compliance with the overtime rule by December 1st. Should there come a time when the regulation is rolled back – in whole or in part – employers will need to reevaluate the situation, keeping in mind the laws of their particular state, the time and effort already expended on compliance, the additional resources required to reclassify or change compensation, as well as morale and other workforce issues.