No enforcement likely for now on overtime rule

Jan 5, 2017

By Tonda Rush
Legal Standing

About the new overtime rule: Has regular play ended and we are now in overtime, or is the game over? That question was on the minds of many publishers in November when U.S. District Judge Amos Mazzant blocked implementation of the Dec. 1 start date for new Obama administration rules that would have doubled the salary threshold for employees to be ineligible for overtime pay.

Between administrations, as we have this year in Washington, even the experts have to keep a scorecard. Administration people leave and new ones arrive, but they may not be in their seats until the crocus blooms. Congress leaves town, but that doesn’t mean it is really gone. In this case, the 114th Congress has recessed, but “pro forma” sessions are still being held in December. Now the courts are involved. The Abbott and Costello comedy routine about “who’s on first and what’s on second” comes to mind.

It is possible to make educated guesses about what comes next, but the truth is that until events play out, the status of the rule is unclear. Here is what we do know:

1. The rule has been suspended for now by Mazzant.

2. It has been appealed by the government to the U.S. Court of Appeals for the Fifth Circuit, which receives briefs Jan. 31. Oral arguments come next, and then some time will elapse before a decision. It would be late February at the earliest before the Obama rule could go back into effect—and that would be if the preliminary injunction issued in November is overturned.

3. A permanent injunction could be issued by Mazzant. Then appeals would have to start over. Half the year could be gone before that case is resolved, during which the rule could not be enforced.

4. Congress could have the ability in January to overrule the Obama order under its Congressional Review Act authority. The CRA is complex, but it is intended to forestall a blizzard of executive orders from departing presidents by giving a new Congress authority to reach back into the prior Congress and disapprove of regulations within 60 days of their issuance. The Fair Labor Standards Act rule was issued in April, 2016. Congress has had so few legislative days during the election year, that some think it may be able in January 2017 to repeal the overtime rule. But the longer Congress stays in pro forma sessions—which it is doing to keep President Obama from making recess appointments—the less likely that option is.

5. Congress could prohibit the Labor Department from spending funds on enforcement. That could happen as early as April, when the existing spending authority for the federal government has to be renewed.

6. The new wild card is labor secretary nominee, Andrew Puzder, the head of Carl’s Jr. and Hardee’s fast food restaurants. President-Elect Trump picked him as the guy to decide what to do with this new rule. Puzder has been openly critical of the Obama rule.

Let’s assume Puzder is nominated and is confirmed by the Senate. What could he do?

He could decide not to continue with the court appeal and let Mazzant’s order stand. The new rule would go away. However, the AFL-CIO is expected to ask the judge to let it intervene to defend the Obama rule, in the event the Trump administration declines to do so. That would keep the appeal alive and maintain the potential that the courts cease to stand in the way of the new overtime rule. So the rule could come back.

Puzder could decide on a do-over. Several bills in Congress, including some supported by the National Newspaper Association, would moderate the pace of salary increases for people not eligible for overtime, but still update standards not changed since 2004. If he chose one of those approaches, he would have to issue a new period of notice and comment under the Administrative Procedures Act. The procedure that led to the Obama rule took approximately 10 months to complete.

Puzder could decide that his agency is not going to enforce the Obama rule until a new one is issued. He could be sued. Then a new court case would begin.

In short, the entire regulatory scheme is now in play. So, what is an educated guess?

First, the Mazzant preliminary injunction would not be lifted before late February at the earliest. By then, the new secretary would be in office.

Second, the new Congress will be unable to pass a law either blocking or requiring new overtime rules. The deadlock in the Senate has not been changed by the 2016 elections. So the likely action would have to be in the Labor Department.

It is unlikely that a Trump appointee—whether Puzder or someone else—is going to enforce this rule. Another milder one may appear, or the agency may simply return to the status quo of early 2016.

Publishers trying to figure out how to get a handle on this moving target probably are best advised to simply be forthright with staffs about it and do what is best for their businesses. The impact of that rule may have gotten some employees a raise already, which would be hard to revoke. More likely, it was going to cause many professional staff to revert to hourly workers, probably cost them some money and for sure impinge upon their abilities to do their jobs. If the rule is suspended and the decision on raises returns to the province of the publisher, staffs will be no worse off than they were in January 2016.

This confusing human resource scenario caused many companies to evaluate how time was spent and to keep better records. If the net of the Obama rule is that publishers now know more about their operations, some good will have come of it.

We will keep you posted.