We recently wrote about the Department of Labor’s new overtime rule that would have raised the floor for the overtime exemption for non-exempt employees from $23,660 to $47,476. Set to take effect on December 1, 2016, the rule was a hotbed of political activity and many were curious whether President-elect Donald Trump would strike it down soon after taking office.
But before this issue had a chance to reach the newly elected president’s desk, a federal judge in Texas postponed its implementation.
On November 22, 2016, a U.S. District Judge in Texas granted a preliminary injunction based on the lawsuit brought by 21 states and the U.S. Chamber of Commerce challenging the new overtime regulations. The ruling came 9 days prior to the rule’s effective date, and prevents the rule from taking effect unless and until a higher court reverses the Texas court’s decision.
So what does this mean?
If the status of the DOL’s new overtime rule was uncertain before, it is now approaching critical status. Still, employers cannot assume they will be free from the new OT salary requirements. An appellate court can reverse the injunction prior to any official repeal or amendment.
Once in office, President Trump could issue another executive order to reverse or modify the rule. However, it is not clear whether President-elect Trump would desire to issue such an order without Congressional input. Therefore, it’s possible that regardless of the status of the lawsuit, Trump will work with Congress on possible changes to the rule.
Congressional Review Act
In addition to the options available to President-elect Trump, the GOP-led Congress has dusted off and updated the seldom-used Congressional Review Act that allows them to reach back 60 working days and eliminate regulations created by a lame duck president. Congress has zeroed in on more than 100 plans to remove any “midnight rules” passed by the outgoing Obama Administration. In all likelihood, Congress will send the new overtime rule to the chopping block with many others. President Trump would need only sign the measure when it reaches his desk.
Between now and Jan. 20, an ongoing dialogue between the Trump Administration and top Republicans may lead to further consideration of this rule.
The issue bears watching closely in the upcoming months.