The election of Donald J. Trump has thrown the future of the DOL’s new overtime rule into doubt. That rule – which dramatically increases the salary threshold for employees to be exempt from overtime and provides for automatic future salary threshold increases – is slated to go into effect on December 1, 2016, six weeks before Mr. Trump assumes the presidency.
Mr. Trump made “regulatory reform” a feature of his presidential campaign. In August, Mr. Trump reportedly said that he would attempt to delay or exempt small businesses from the overtime regulation, but he did not say whether his administration would try to repeal the entire regulation. In addition, a high-ranking economic adviser to Mr. Trump predicted last month that the overtime rule would limit job growth, but he too stopped short of saying that a Trump administration would immediately overturn it.
As things stand now, it appears that the only way the overtime rule will not go into effect on December 1 is if one of the court challenges, already filed, is successful. The possibility of that happening is difficult to reliably predict. Moreover, any congressional action to prevent implementation of the rule while President Obama remains in office would be unlikely to withstand his veto.
That leaves three options for the incoming Trump Administration, none of which are easy. First, it could ask Congress to pass a law overturning the regulation, but this requires a filibuster-proof majority in the Senate, something Republicans will not have. Second, it could hope that judges overturn the regulation. Third, it can use the regulatory process to reverse the regulation, but this will take years and may confront obstacles along the way. Of course, the Trump Administration might be willing to compromise on a more modest increase in the salary threshold, as it had not been increased since 2004.
Despite the possibility of repeal, we suggest that employers stay the course and plan for the December 1 implementation date. If future laws or regulations are passed modifying the new overtime rule, employers can adjust at that time. Remember, even if Mr. Trump directs his Labor Department to overlook the rule, employers are not protected against the ability of private plaintiffs to sue and the DOL’s ability to start enforcement before Inauguration Day.
As election pollsters just found out, predicting the future is risky business. What follows the election – and the fate of the overtime rule in particular – may prove just as hard to predict.