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Trump Overtime Rule to Get Final White House Review Next Week

Aug. 9, 2019, 10:09 PM

A high-priority Trump Labor Department overtime rule, which takes a more business-friendly approach than attempted in the Obama administration, will be sent to the White House for final review on Aug. 12, according to a senior DOL official.

The regulation is expected to make about 1 million workers newly eligible for time-and-a-half overtime pay when working more than 40 hours in a week. It would replace a 2016 rule that never took effect but would’ve given four times more workers new access to overtime wages. The new rule would lift the salary threshold below which workers automatically receive overtime wages to about $35,000, compared with the current level of $23,600 per year. The Obama regulation would’ve doubled the threshold to $47,500.

The department is sending the final draft to the White House Office of Information and Regulatory Affairs just five months after proposing the rule, which garnered more than 116,000 public comments. DOL officials have stressed a sense of urgency to complete the rulemaking in time to protect it from a likely legal challenge pressed by worker advocates. The administration wants the rule in place before the end of President Donald Trump’s first term in office.

Influential members of the business community have said the swift completion of this rule is their top workplace policy priority for the remainder of Trump’s four-year term. The department is also working to churn out a pair of regulations on calculating overtime pay rates and limiting wage and hour liability for franchisers and businesses that use staffing labor.

“We remain laser-focused on getting these regulations done, going at breakneck speed,” the department official said.

Legal Battle Likely

Companies throughout the country have remained in limbo for more than five years as to how to make payroll and staffing decisions until they have a firm sense of which workers must be paid time-and-a-half wages.

Meanwhile, Democrats and worker advocates are eager to see the Trump DOL rule so they can finalize legal strategies for taking it down in court. They’re likely to argue that the department violated the Administrative Procedure Act by watering down the prior administration’s effort and depriving more workers of overtime pay without adequate justification.

“The Administrative Procedure Act requires careful consideration of all of the comments that were sent in. And there were thousands of substantive comments to consider,” Judy Conti, government affairs director for the National Employment Law Project, told Bloomberg Law. “If they’re rushing through it this quickly it’s absolutely positive that they did not perform their due diligence and we will be scrutinizing everything very carefully.”

Speeding up the final rule gives Trump administration attorneys additional time to defend the rule in court. They’re concerned that Democrats could kill the rule if Trump loses his re-election bid and the regulation is still in limbo. A Democratic president could also seek to revive the 2016 rule, which a federal judge shot down for being too aggressive.

The senior DOL official declined to comment on certain details of how the final rule has been updated to reflect the input the agency received from the public after the proposed overtime rule was issued in March.

The source invoked the recent marching orders of new acting Labor Secretary Patrick Pizzella, who, in an email on his first day in charge in July, directed staff to “focus like a laser beam” on completing regulations. This marked a departure in tone from Pizzella’s predecessor Alexander Acosta, who resigned as labor secretary in July amid public outcry over his handling of a 2008 plea deal for financier and accused sex trafficker Jeffrey Epstein. Acosta also ran into trouble with some White House officials who criticized him for slow-walking deregulatory policy actions.

The overtime rule, while projected to impose some new compliance costs on employers, is still labeled as “deregulatory” by the White House because of its savings when compared to the 2016 rule. But the DOL compares it to the current overtime standards, established in the George W. Bush administration, in touting the benefits for workers.

The March proposal didn’t establish automatic, periodic increases of the salary threshold that were floated in the Obama proposal. Instead, the department asked the public to weigh in on whether and how the DOL might update overtime requirements every four years. The proposed rule also didn’t tinker with the current “duties test,” a checklist used to determine whether workers making more than the salary threshold are supervisors, not entitled to overtime wages.

The salary threshold was last increased in 2004. The DOL is using the same economic methodology used to reach that standard, which the department officials say should protect the proposal from litigation.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; Cynthia Harasty at charasty@bloomberglaw.com