Franczek Radelet's Navigating Change site provides timely and credible information on legal and policy developments that will impact employers and educators. Many sources speculate and opine on every development of the new administration; you will not find that here. Our goal is to focus on the truly important developments that employers and educators need to know, and what they need to do to prepare for change. Each update will tell you:
What we know – The concrete facts on developments of importance to employers and educators.
What we believe – Informed predictions as to what may happen under the Trump administration.
What we don’t know – We will explain what issues are still in play.
What it means – The key takeaways on what to do now to prepare for change.
What will Happen at the DOL Wage and Hour Division?
What We Know
President Trump has selected Andy Puzder to serve as his Secretary of Labor. Mr. Puzder is CEO of CKE Restaurants, which owns the Hardee’s and Carl’s Jr. restaurant chains. Mr. Puzder has been a vocal critic both of the Department of Labor’s proposed overtime exemption rule and of proposals to significantly increase the federal minimum wage. His confirmation hearing currently is scheduled for February 2, 2017.
The aforementioned overtime exemption rule would raise the minimum salary threshold for the executive, administrative and professional exemptions from $455 per week ($23,660 annualized) to $913 per week ($47,476 annualized). This rule was to take effect on December 1, 2016, but a federal district court in Texas issued an injunction temporarily blocking the rule on November 22. This ruling has been appealed and briefing on the appeal is set to conclude by January 31, 2017. This leaves open the question of whether President Trump will direct the DOL to drop its defense of the new rule once he takes office. To hedge against that possibility, on December 9, 2016, the AFL-CIO filed a petition to intervene in the lawsuit so that it can defend the rule even if the DOL bows out at the new President’s direction.
What We Believe
It is highly likely that a Puzder-led Trump DOL will seek to undo Obama-era regulations, executive orders and initiatives that impose obligations on businesses, including the now enjoined overtime exemption rules.
While we don’t yet know the precise cause of death, it seems safe to say at this point that the new overtime exemption rule in its current form is likely to be killed before it ever takes effect. While the Trump administration cannot wipe away the new rule with the stroke of a pen as it can an executive order, withdrawing the DOL’s defense of the pending litigation in Texas may have the same practical effect, particularly if the court denies the AFL-CIO’s petition to intervene in defense of the rule. The Republican-led Congress could also block the rule.
What We Don’t Know
President Trump is nothing if not unpredictable. While his nominee for Secretary of Labor certainly seems to signal a more business-friendly, laissez-faire direction for the Department of Labor, Trump campaigned on a populist message that may not align perfectly with business interests. It is at least conceivable, for example, that the Trump administration and Puzder-led DOL could pursue some modest increase in the minimum wage or in the minimum salary level for exempt employees in order to demonstrate their concern for working Americans. Some Congressional Republicans have also signaled a willingness to consider more moderate increases in the minimum salary threshold for exempt employees. We do not know, however, whether such legislation would muster the support in Congress and the new administration necessary to become law.
What this Means for Employers
In general, it seems highly likely that we will see a more employer-friendly DOL over the next several years. However, major changes may take time to materialize, and at this point we cannot say exactly what will change or how. For the time being, employers should not make any changes in anticipation of rules being rescinded or enforcement actions being curtailed. To the contrary, the shift in direction at the federal level is likely to accelerate the growth in state and local workplace regulations. The resulting patchwork of regulations may leave some employers longing for the days when state and local governments were willing to leave such regulation to the feds.