Benefits & Compensation News

Why the fight for the DOL’s overtime rule isn’t over yet

The DOL’s overtime regs aren’t dead yet — and the nation’s largest union federation, the AFL-CIO, just reminded the Trump administration that it plans to fight any attempts to overhaul the changes the Obama administration put in place.

Specifically, the AFL-CIO plans to sue the DOL if it “dilutes” the final overtime regs that were slated to take effect in December of 2016.

What does the federation consider a dilution of the OT regs? AFL-CIO President Richard Trumka says any changes by the Trump administration that attempt to set the new rule lower than salary threshold increase finalized under the Obama administration will lead to legal action by the federation.

On top of the threat of legal action, the AFL-CIO said it plans to defend the current overtime rules — which include a minimum salary threshold of $47,500 per year — in court (the regs are currently on hold as a result of a court injunction).

Trumka believes taking the overtime expansion away from even one applicable worker could have devastating effects and said, “anything that dilutes it [the DOL’s new overtime regs] is bad.”

An ‘unfortunate’ threshold

Employers also recently got a glimpse of Trump DOL nominee Alexander Acosta’s feelings toward the DOL’s overtime changes.

During his DOL secretary confirmation hearing, despite consistently dodging attempts to determine whether the feds would defend the OT rule in court, Acosta did seem to at least acknowledge the problems with the FLSA’s current salary threshold.

He said it was unfortunate the threshold hadn’t been updated since 2004 and promised those at the hearing he was:

“very sensitive to the fact that it hasn’t been updated since 2004. We now see an update that is a very large revision and something that needs to be considered is the impact it has on the economy, on nonprofits, on geographic areas that have lower wages.”

However, Acosta said say doubling the salary threshold would not only create “a stress on the system,” it might also overstep the DOL’s legal authority.

Legal experts seem to surmise Acosta’s comments hint that he has a desire to increasing the salary threshold to somewhere between the amount set by George W. Bush in 2004 and the increase finalized by President Obama in 2016.

If that’s the case, Acosta could be looking at legal action from the AFL-CIO.

How we got here

As HR pros are well aware, the OT changes are currently in limbo. Here’s a refresher on how that happened: Just before the Dec. 1 deadline for the new overtime rule, a Texas federal court judge handed down a preliminary injunction that essentially put everything on hold. The move has left employers everywhere asking themselves, “What now?

As we’ve written about previously, the Texas court case focused on two consolidated lawsuits. These suits, which were brought forward by 21 states and a number of business groups, challenged the agency’s FLSA salary threshold increase on the grounds that the DOL overstepped its authority in rewriting the new regs.

And the judge agreed with this assessment. In his ruling, Judge Amos L. Mazzant said that by increasing the OT salary threshold so significantly, it essential made the overtime-exemption test a one-factor — i.e., salary — test.

This steep increase basically eliminated the duties test for employers, the judge said, and the law requires firms to look at the duties of employees to determine who falls within the FLSA’s overtime exemption.

 

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