'I am worried': Former DOL official says $47K overtime rule still a possibility
WASHINGTON — Employers aren't out of the woods just yet with respect to the Obama-era overtime rule, attendees heard at the Society for Human Resource Management's employment law and legislative conference March 12.
"If you had plans that you didn’t implement, I hope you didn’t throw them away," Tammy McCutchen, a former U.S. Department of Labor Wage and Hour Division (WHD) administrator from the Bush administration, told the audience. "Should something bad happen, we could still be back at 913 a week."
When the Obama WHD issued a regulation requiring that employers pay overtime to all workers making less than $913 per week (which amounts to $47,476 per year), the business community sued and won a permanent, nationwide injunction just before the rule took effect.
Now, while the old $455 per week ($23,660 per year) salary threshold remains in effect, DOL is still considering an update, albeit a lower one. The agency said in its regulatory agenda that it expects to propose a rule in October.
But a potentially major wrinkle remains, said McCutchen, now a principal at Littler Mendelson. Should a few pieces fall into place, McCutchen said she's worried they could create a perfect storm that puts the $913 per week threshold into effect.
"Why am I worried? I am worried because we still have [an] active 5th Circuit appeal," she said. DOL appealed the order blocking the rules while President Obama was still in office but largely dropped it following President Trump's inauguration. However, it remains paused as DOL works on new regulations.
Why would the department want the appeal stayed? Why not withdraw it entirely? "Your guess is as good as mine," McCutchen said. There are a few theories but one focuses on the fact that the judge who issued the injunction arguably called into question DOL's ability to set a salary threshold at all — something that could pose a problem for DOL's future overtime rule and also questions the agency's broader authority to regulate. This may make sense, as DOL specifically asked the 5th Circuit to approve its ability to set a threshold. Others say the Trump administration doesn’t like the idea of one district court judge completely undoing an agency's rulemaking with one nationwide injunction.
And while this might not seem like a big problem with new rules on the way, regulatory agenda dates "are never met ... ever," McCutchen said. "If they publish October 2018 it will be a freaking miracle." And even if they did, that puts a final rule in late 2019 in a best-case scenario.
Assuming that there's some kind of controversy or delay (which seems likely), "all of a sudden we're in 2020" — an election year. "What happens if Republicans don't win back the White House [and still don't have] a new final rule? You've got the 5th Circuit appeal alive and well and now that DOL is going to defend that ... salary level very vigorously."
"Keep watching this because if something does not get done in 2019 or 2020, we could be in a world of hurt," McCutchen said. And that hurt could come quickly. If the 5th Circuit lifts the injunction, a mandate would follow in 30 days and employers would have to be in compliance at that point, she said.
You don't have to panic just yet, but keep your eye on this and hold on to your plans from 2016, McCutchen said. "Watch for news on overtime; it's really important to keep up to date on it."
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