An Update on the Overtime Rule

By Katherine Muniz
March 23, 2017

The fate of the overtime rule has had employers in suspense for the past four months, but now, according to one member of President Trump’s transition team, a final resolution isn’t far off.

According to Tammy D. McCutchen, principal at Littler Mendelson and a member of President Trump’s transition team, the Trump administration is prolonging the decision until their expected Secretary of Labor nominee, Alexander Acosta, is instituted.

Acosta’s confirmation hearing occurred on March 22, and according to McCutchen, the expectation is that he will sail through confirmation without any issues. Once instituted, other high-ranking positions at the department will also be filled under his leadership.

In the meantime, the Trump Administration has until May 1st to make a decision, as an appeals court recently granted them a delay in asserting their position on the overtime rule. The overtime rule, developed under the Obama Administration, would have doubled the existing overtime threshold, making approximately 4.2 million more workers eligible for overtime. After being legally challenged in court, the overtime rule was halted just days before its December 1 effective date.

This news was discussed at the Society for Human Resource Management’s (SHRM) employment law and legislative conference. As far as a potential course of action the DOL could take, McCutchen, forecasted a few options:

  • The DOL could drop its appeal and hope that the rule is permanently enjoined by the lower court. However, a group of labor organizations, the Texas AFL-CIO, has asked to take over defending the rule if the DOL bows out.
  • The DOL could also issue a final rule nullifying the old final rule.
  • The DOL could then begin a new rulemaking with a notice-and-comment period and consider a lower threshold  (around $35,000-$38,000) that doesn’t have automatic increases.

While McCutchen doesn’t expect a new Notice of Proposed Rulemaking to be issued within the labor secretary’s first weeks, she says businesses can expect to have information one to two months after Acosta’s presumed confirmation. She also advises that business owners shouldn’t change affected employees back to ‘exempt,’ just yet, and to “wait a little bit.”

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