President Trump had a busy first week following his inauguration: ordering construction of a wall, starting to unwind the ACA, arguing with the media about how many people attended his inauguration – the list goes on. One thing that he has not yet gotten to is the U.S. DOL’s stalled overtime exemption rules. Right now the rules remain in limbo, temporarily suspended by order of a U.S. District Court in Texas. That order is now on appeal to the 5th Circuit Court of Appeals. Earlier this week, the Department of Justice, representing the DOL in the case, asked the 5th Circuit to extend the due date for the government’s brief in the appeal by 30 days “to allow incoming leadership personnel adequate time to consider the issues.” The coalitions of states and business groups opposing the new rules, not surprisingly, did not oppose that request.
While the new administration has not yet taken an express position on the issue, President Trump has railed against regulations seen as hampering business, and he nominated a vocal critic of the rules, fast food CEO Andy Puzder, to lead the Department of Labor. However, because the rules were passed through a process of “notice and comment” rulemaking, the Trump Administration cannot simply reverse them with the stroke of a pen without going through the same lengthy process of publishing proposed rules, seeking public input, and then issuing final regulations. One way to avoid that process would be to direct the Department of Justice to drop its defense of the pending lawsuit and admit that the rules were improper, allowing the court’s injunction to become final. However, even that might not be the end of the story, as the AFL-CIO has asked for leave to step in and defend the final rules should the government try to bow out.
In short, employers are still stuck right where they’ve been since November. The rules are on life support and it’s likely that the Trump Administration or Congressional Republicans will pull the plug in one way or another sometime soon. But we don’t know exactly when, and we can’t yet completely rule out the possibility of an unexpected recovery that would allow the rules to take effect – possibly retroactive to December 1, 2016.