The Forecast for the Future of the DOL Overtime Rule Changes
If the outcome of the FLSA revisions could be described in one word, it would definitely be “Cloudy.” The current injunction is not permanent but keeps the DOL from enforcing the changes for however long it takes for the case to be resolved. As of November 30th, the judge has not held a hearing or ruled on the case. Should he issue a ruling anytime soon, the fact that an injunction was issued suggests that the judge is leaning in favor of the groups that want to stop the rule changes. On December 1, 2016, the Department of Labor (DOL) filed a motion for an expedited briefing of its appeal, hoping that the appeal will be heard before the January 20, 2017 change in administrations.
1. The Appeals court may decide that the rules were acceptable and lift the overtime rule injunction, allowing for implementation and enforcement (presumably with a bit of lead time for employers).
2. The Appeals court may agree that the DOL overstepped their powers and maintain the injunction.
3. The Appeals court may find parts of the new FLSA rules acceptable and lift the injunction on those portions, while maintaining the injunction on the rest.
In a recent SHRM article, Gerald Hathaway, an attorney with Drinker Biddle in New York City believes the case will certainly get the attention of the 5th Circuit. According to Hathaway, the judge’s use of a 1933 dictionary to determine the original interpretation the 1938 FLSA calls into question the DOL’s authority to ever have included a salary test in the determination of those eligible for overtime. “So if the statute was so plain in 1938, which is indeed the core of the judge’s holding, then there never was any basis for the DOL to impose a salary test of any kind at any time,” stated Hathaway.
Kathy Mood, Editor of HR Dive, has warned, “Litigation will likely drag out until President-elect Donald Trump takes office.” This will leave the ultimate fate of the DOL and the FLSA in the hands of the Trump administration when it takes office on January 20, 2017.
Although the President-elect has not weighed in on the FLSA ruling, he will have to opportunity to select a new Secretary of Labor who will be the deciding factor on the position of the DOL going forward. On December 8, the Trump administration announced CKE Restaurants Inc. CEO, Andrew Puzder, as his pick for Labor Secretary. Puzder has expressed views in line with the Republican platform and with his opposition to raising the federal minimum wage, it is highly unlikely he will favor any actions on behalf of the DOL that will significantly impact business costs.
The only thing all parties seem to agree on is that the change was intended to provide some level of protection to workers being classified as “managers” who were being paid small salaries despite working over 40 hours per week. It is not clear, however, if the Trump administration has plans to create a new rule or to leave the current FLSA as is.