What Will The Trump Administration Mean for Wage and Hour Law?

This is a post I certainly didn’t expect to be writing even 12 hours ago, but now that the results of the election are clear, it’s time to give some thought to what lies ahead under the forthcoming Trump administration. Details will of course start to emerge over the next couple of months, but I have a few early predictions about what employers should and should not expect.

1. An eventual repeal of the new FLSA overtime rules just became much more likely. While it would take time for President Trump’s labor department to go through the process of issuing new regulations to replace those set to take effect December 1, it is highly likely that Congress will address the issue through legislation now that the likelihood of a veto by a Democratic president has been removed. The real question is whether such legislation would simply roll back to the old minimum salary level of $455 per week, or, as some in Congress have proposed, phase in a more gradual increase over the next few years.
2. We don’t know what will happen with the new exemption rules between now and January when Trump takes office. There are a few different possibilities. One is that the Obama administration will stay the course and move forward with the rules as if nothing has changed. Employers (at least, those who want to be in compliance with the law) will have to move forward with reclassifying employees and making other necessary changes to their compensation structures and payroll practices by December 1. If the law later changes, those employers will need to make some decisions about whether to roll any changes back or just leave well enough alone. A second possibility is that the Obama administration might delay any DOL enforcement actions under the new rules in anticipation of legislation under the new administration. I have no inside knowledge here, but that seems unlikely. The current DOL is strongly committed to the new rules and likely wants to see employers implement changes in the hopes that they will stick even if Congress enacts legislation lowering the salary level once again. Also, even if the DOL does not itself take action to enforce the new rules, the rules remain law unless they’re overturned either by a new rule (which must go through an extensive rulemaking process, just as the current rule did) or by an act of Congress. So even if the DOL does not go after employers who are not in compliance with the new rules, that does not stop private litigants, or for that matter state labor departments in states that (like Illinois) mirror the federal rules in their state overtime laws. There are a couple of other outside possibilities. One is that the current Congress strikes a deal with the lame-duck Obama administration to enact legislation preserving some increase in the minimum salary but phasing it in over time. If done quickly this might save employers from having to make changes now and reverse course later. While that might be the sensible approach to the problem, I’m not holding my breath. The other wild card here is the pending lawsuits seeking to overturn the new rules. While most legal experts don’t give them a high likelihood of success, stranger things have happened.
3. The DOL’s posture toward employers is likely to change – eventually. Under the Obama administration, it seems fair to say that the U.S. Department of Labor has become much more aggressive in pursuing enforcement action against employers and in using administrative action to impose new restrictions on employers. The DOL has hired more investigators and field staff, and anecdotally I can certainly report that more of our clients are being visited by DOL agents in the last couple of years than was previously the case. But that did not happen overnight when President Obama took office. The federal government is a huge ship, and it takes a long time to change direction. It seems likely that the Trump administration will seek to rein in the Department of Labor, particularly in its more aggressive initiatives to change (or, as the DOL would probably put it, fill in the gaps) in existing law through “Administrator Interpretations” and rulemaking. It’s also likely that the DOL will see its enforcement budgets cut, meaning fewer audits. However, just as it took time for the Obama administration to change the DOL’s course from the relatively business-friendly one set under President Bush, employers should not expect to see these changes until the new administration has had time to put its own team in place, establish budget priorities, and make the other policy changes needed to effect their vision for the agency.
4. State and local governments will continue to ramp up their regulations. While employers may welcome some of the changes that they are likely to see at the federal level under the new Trump administration, those changes are likely to accelerate the recent trend of state and local governments enacting their own regulations on employers, at least in the remaining “blue” strongholds around the country. This may further complicate the lives of HR professionals whose organizations operate across multiple jurisdictions.

Of course employers should take all of these predictions with a very large grain of salt because, frankly, we don’t know what is going happen now. For the time being, the best advice that we can give to employers is to stay the course, keep preparing for the new FLSA exemption rules set to take effect on December 1, and wait to see where the dust settles. But also be prepared for further changes that may well be on their way.