In November, with only days to go before a new federal overtime rule was set to kick in — adding an estimated 4 million American works to the list of those eligible to receive overtime pay — a federal court granted a nationwide injunction blocking the new rule from being enforced. Now Labor Secretary Thomas Perez is appealing that injunction, even though his successor under the incoming Trump administration will almost certainly drop that appeal once in office.
The currently halted rule would have raised the federal wage threshold for employees to be eligible for overtime.
Currently, most employers are only required to provide overtime pay for workers earning up to $23,660/year ($455/week). The rule that had been slated to go into effect Dec. 1 would have raised that threshold to $47,892/year ($921/week). By the Labor Dept.’s estimates, that would have made 4.2 million additional people eligible for overtime pay. The rule also includes a mechanism that automatically adjusts this salary threshold every three years.
More than 20 states challenged the rule, arguing that the Department had overstepped its authority in setting the new salary levels and devising that automatic update mechanism for the salary threshold. The judge found that there was enough evidence to merit an injunction. He also noted that less total damage would be done by stopping the rule now, rather than allowing it to be enacted and then having to roll the overtime rule back potentially months after it had gone into effect.
This morning, Sec. Perez filed the Department’s brief in support of the appeal with the Fifth Circuit Court of Appeals based in New Orleans.
In granting the injunction, the District Court judge concluded that the law does not allow the Labor Dept. to use only an employee’s salary — regardless of their duties — to determine if they are eligible for overtime. However, the Department counters that this ignores binding legal precedent about Labor’s authorities to establish these standards.
The brief also argues that the judge provided no plausible reason for overturning the actual salary level threshold set by the rule.
“The updated salary level is commensurate with salary levels that the Department has set over the past 75 years,” explains Labor.
Regardless of whether or not one agrees with Sec. Perez’s argument, the appeal of the injunction may be all for naught, as the entire matter could — and likely will — be dropped under the Trump administration.
President-elect Trump has named Andy Puzder — CEO of CKE Restaurants (Carl’s Junior, Hardee’s) — as his pick for the next Secretary of Labor.
It’s not mere speculation to say that Puzder is unlikely to pursue legal action that could revive the overtime rule. Long before he was ever considered for a cabinet post, he was speaking out against the rule.
Last May, in an opinion piece for Forbes, Puzder derided the rule, arguing that the estimates of overtime pay for millions of additional Americans were based on an unrealistic view of the workplace.
“The real world is far different than the Labor Department’s Excel spreadsheet,” said Puzder at the time. “This new rule will simply add to the extensive regulatory maze the Obama Administration has imposed on employers, forcing many to offset increased labor expense by cutting costs elsewhere. In practice, this means reduced opportunities, bonuses, benefits, perks and promotions.”
If confirmed by the Senate, Puzder could simply direct Labor Dept. lawyers to drop the appeal, leaving the injunction in place.
There is the slim possibility that a third party — possibly a labor organization — could try to intervene and keep the appeal alive, but they would have to demonstrate to the court that they have standing to argue against this injunction.
Even if that were to happen, it’s possible that legislators could attempt to roll back the rule itself using the Congressional Review Act.
That little-used 1996 law requires that regulatory agencies give Congress a window of time to consider new, important rules. If lawmakers don’t think a rule should be enacted, they can issue a joint memorandum and present it to the President, who can then choose to veto or sign it. If signed, a rule will be rolled back.
This law has only been used successfully once in 20 years, but it’s believed that Congress will use the Review Act to undo a number of the Obama administration’s recent rules.
The question with the overtime rule will be whether or not it fits into the Review Act’s timeline. It’s believed that all major rules published in the Federal Register since the end of May could be up for consideration, but the exact date is currently unclear. The overtime rule was published on May 23, which may put it out of reach for review.
Source: Consumer Reviews