A New Boss In Town - Wage & Hour Issues under President Trump01.20.17
The ramp-up to Donald Trump's inauguration as the nation's 45th President has been a swirl of talking heads, expert opinions, Saturday Night Live parodies, and, of course, the Twitter wars that seem to fuel headlines by the hour. But after the dust settles and the nation's attention shifts from the spectacle back to the routine, what should employers expect with a new leader at the Department of Labor (DOL)? What will the landscape look like on January 20, 2018? Here are our impressions on where we might be a year from now on some key issues.
The New Secretary of Labor Will Be a Game Changer
Andrew F. Puzder - CEO of the parent company of Hardee's and Carl's Jr. - has been nominated for U.S. Secretary of Labor. It is widely expected that Mr. Puzder will roll back many of the policies and initiatives championed by his predecessor and the Obama administration. For example, Mr. Puzder has been a vocal opponent of the new overtime rule (now presently in judicial limbo, see below), noting in a Forbes op-ed piece that the rule would ultimately lead to reduced opportunities, bonuses, benefits, and promotions. Perhaps of similar impact will be Mr. Puzder's likely shift to a more hospitable environment for employers relating to regulatory enforcement, such as a departure from the DOL's position in recent years that even minor violations should result in liquidated damages or civil money penalties. All in all, it appears that Mr. Puzder's approach calls for less regulation which in his view will create more jobs to benefit workers and employers. Thus, a year from now we can expect a more employer-friendly DOL and Wage & Hour Division that has a more conciliatory and less hostile approach to business.
The New DOL FLSA Overtime Rules Are DOA, at Least in their Current Form
In November 2016, a Texas Federal Judge enjoined enforcement of the FLSA amendments that raised the minimum salary required for a worker to be exempt from overtime. The case is presently on appeal and it is anyone's guess what the Fifth Circuit Court of Appeals may do. What is clearer are the options available to Mr. Puzder once he is confirmed. He could withdraw the pending appeal before a decision is issued by court, thereby leaving the lower court's ruling in place and effectively killing the new rule. Alternatively, he could exploit the rulemaking process and roll back or modify certain provisions of the rule, such as lowering the new salary threshold or implementing a small business exception. Regardless of how the matter is resolved in the courts, it is a certainty that the overtime rule will not survive in its current form a year from today.
State and Local Authorities Will Increase their Regulations
We can expect that as federal wage and hour regulations and their enforcement are likely relaxed under the new administration, state and local governments will dial up their efforts to step in where they see a need. For example, efforts to increase the federal minimum wage have stalled for years over partisan lines, and it is unlikely workers can expect a significant hike in the near term. This will lead us to see more state and municipal governments take their own steps to increase the minimum wage floor, as 18 states have done since Obama took office. We will also likely see local authorities take similar steps with regard to paid sick leave and expanded maternity and paternity leave rights. A blossoming patchwork of state, county, and municipal rules over the next year will create compliance issues for employers and, of course, greater legal risk. Whether by Tweet or by regulation, other issues will unfold over the next 12 months that we cannot anticipate today. But what we know for certain is an overall environment of change at the Department of Labor that will significantly impact practically all employers.