****So…. news flash…. remember when I said there were several attempts to block the rule to no avail. Well, about that. Within mere days of the 12/1 comply date, a Federal District Judge in Texas has put a halt on the new overtime rules. Twenty plus States had filed suit stating the DOL had no authority to revise the FLSA rules and the Judge has sided with them pending further investigation into the law. Stay tuned folks, this should get interesting****
The U.S. populace has voted, and Trump is President- Elect.
Now HR folk are wondering what will become of all of the stuff we have had to implement within the last 8 years from health care reform, to newly defined protected classes to the FLSA. Let’s chat for a sec on the FLSA.
To recap, in March of 2014, President Obama issued a presidential memorandum to the Department of Labor to simplify and modernize the FLSA rules that govern exempt versus non-exempt status, provisions that were last reviewed in the 70’s. The DOL issued final rules in May of 2016. The new rules stated that any employee making $47,476 (from $23,660) or less had to be non-exempt regardless of his or her job duties. Further, the salary threshold would be reviewed every three years (next time: 2020) and would be indexed against the 40th percentile of the lowest wage region of the country. These rules are effective 12/1/2017. (Note: Trump does not actually become President until his inauguration on 1/20/2017) The utopian goal behind the changes was to stop greedy companies from working their employees 70 hours a week whilst still paying them dirt-cheap salaries and not paying an extra dime past 40 hours. Good for the American worker, right?
Everyone proceeded to lose their shit, because if there is anything crusty CEO’s hate more than regulation, it’s overtime. God forbid that an employee be paid for putting in a little extra time on behalf of the business and expect to be paid for it. Employees can be so greedy sometimes, geez. So anyways, there were several attempts to block the rule or delay it but to no avail.
Here is what I think:
- Companies who are subject to the FLSA still have to get compliant with the new law by 12/1, that’s in less than 3 weeks from now. So get your shit together and do the right thing. Remember Trump will not be sworn in until January 20th.
- If I am to believe anything Trump said on the campaign trail, which was minimal on content and more about fire and brimstone rhetoric, I think his sights will be set on blowing up the ACA and deporting illegal immigrants rather than the DOL changes.
- However, the new overtime regulations could just be the low hanging fruit that his administration feels would get him a quick win with corporations, small business owners, the aforementioned crusty CEO’s, etc…
- The DOL will NEVER go away and neither will the FLSA. The FLSA has been in place since the 1930’s and no presidential administration has challenged its existence. And if the FLSA doesn’t go away, the DOL will still be around to enforce it.
- Since the FLSA is sticking around, the salary test will still be a thing. I think if Trump focuses any attention on this matter at all, he will likely reduce the salary threshold but I do not believe he will roll it back to the original salary of $23,660. Trump still wants to appear favorable to blue-collar American workers. Artifically suppressing salaries would not fare well for him and his loyal followers, if their behavior at his rallies is any indication, will be very vocal in their displeasure.
- I believe Trump’s administration will leave intact the duties test as a means for businesses to use these tests to justify “gray” area positions as exempt. This will enable companies to better defend their classifications in the unfortunate event of a DOL inquiry.
- The reaction of #7 above could be that certain states pass their own “labor standards act” which defines exempt versus non-exempt status based on a higher salary threshold than that of the federal FLSA law.
- Or, the States, in an attempt to simplify the duties test could pass laws that define a certain percentage of non-exempt tasks that would govern the exempt or non-exempt status of a position. For example, the State of California, mandates that for (most) job roles which contain 50% or more “non-exempt” tasks, those roles MUST be classified as non-exempt and are then subject to overtime.
- The DOL has been preparing to ramp up classification enforcement. I don’t think Trump will limit or reduce the DOL’s authority, but I think he will minimize the department’s resources (i.e. staff) to the point that the DOL would no longer be able to go full-force.
- One of the likeliest things to go away under a Trump administration is the review of the salary threshold every three years. I think there will be a one and done change to the salary threshold and that’s that.
- Let’s get real, most companies have been hiding behind the duties test for quite awhile knowing full well they would not be able to successfully defend a position’s exempt status. I think the overtime rule changes have given companies a window to “make it right” without becoming the target of a DOL audit or wage and hour suit. So, irrespective of what The Donald does or does not direct his team of monkeys to do, treat your employees and the law (as it stands today) with some respect. Give the role’s the proper classifications they deserve, put some limitations in place with respect to employee overtime, and focus on other things that matter, like what the hell happens with the ACA.