Daily Labor Report®

Trump Administration Weighs New Overtime Pay Requirements (1)

Sept. 24, 2018, 5:04 PM; Updated: Sept. 24, 2018, 7:03 PM

The Labor Department is set to update private sector overtime pay requirements, but officials still won’t say exactly how the new approach will differ from a stalled Obama-era move designed to put more money in workers’ pockets.

The department is eyeing January as a soft deadline to unveil a proposed regulation that would revise overtime eligibility under federal wage-and-hour law, a DOL spokesman told Bloomberg Law Sept. 24. A trio of department officials earlier the same day held the last of five scheduled listening sessions seeking feedback on when employers should be required to pay workers time-and-a-half wages for overtime.

The DOL appears to be set to increase the annual salary threshold—currently $23,500—under which workers are automatically entitled to overtime pay for all hours beyond 40 in a week. The department isn’t expected to go to the controversial $47,500 level proposed by the Obama administration in a rule that a federal judge in Texas blocked last year.

“We are not against salary increases,” but it would have been doubled under the Obama rule, Chamber of Commerce Senior Manager Stephen McAllister told Bloomberg Law after the listening session. “That’s too big to do overnight. The people we represent are operating with razor thin margins.”

The new rule comes as the Trump administration has focused largely on freeing businesses from the yoke of regulation and taxes, including by scrapping various Labor Department rules. It will be one of the relatively few moves to increase regulatory responsibility for employers by likely expanding the pool of workers who must be paid overtime for all hours beyond 40 a week.

The Obama administration pitched its version of the rule—which was expected to make some 4 million workers newly eligible for overtime—as a way to boost paychecks in an era of wage stagnation. Supporters at the time also said it was a response to Republican opposition to efforts to raise the federal minimum wage.

“It’s one of the concrete things that the president and the Labor Department can do to jump-start middle class wage growth,” Paul Sonn, an attorney with the National Employment Law Project, told Bloomberg Law. Sonn was among a number of worker advocates who urged the Labor Department to move forward with the Obama overtime rule.

Fine Line

The Providence, R.I., listening session featured input from worker, management, and industry advocates over nearly two hours.

Supporters of the Obama rule told DOL officials they should significantly hike the salary threshold to track inflation. Business community representatives said they generally back a “reasonable” threshold increase but argued that the Obama proposal would have gone too far and forced some employers to shed jobs and hours.

Labor Secretary Alexander Acosta has previously signaled that the salary threshold should be updated, perhaps to somewhere in the low $30,000 range, to account for inflation since it was set in 2004 by the George W. Bush administration.

The DOL is also considering whether to vary the salary threshold based on regional or other cost-of-living differences. Department officials also haven’t said publicly whether they plan to keep an Obama rule provision that would have automatically updated the threshold to track inflation every few years.

The Trump administration is in a delicate spot: The DOL faces a potential lawsuit from worker groups if it sets the salary level too low and litigation from business organizations if it goes too high or keeps the automatic updates.

Federal District Judge Amos Mazzant initially blocked the Obama rule in 2016, saying the department focused too much on workers’ salaries—rather than their job duties—in updating an overtime exemption for white-collar employees. The Trump Labor Department appealed that decision in a case still pending, in part to clarify whether the department has the authority to consider salary to some extent.

(Updated to include additional reporting throughout.)

To contact the reporter on this story: Chris Opfer in New York at copfer@bloomberglaw.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bloomberglaw.com; Terence Hyland at thyland@bloomberglaw.com

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