One of the most immediate questions for employers after the presidential election is whether the Department of Labor’s (DOL) recent increase in the minimum salary for overtime exemption will be rolled back or repealed.
Our best, most precise answer on this critically important issue to so many employers who have worked so hard getting ready for the this change is: “It depends.”
How Could Something Happen Now?
In 1996, the Congressional Review Act (CRA) was passed allowing Congress to disapprove and revoke a final rule promulgated by a federal agency. To do so, Congress has 60 days to enact a joint disapproval resolution invalidating the agency’s final rule. The disapproval resolution must be enacted by a majority vote in both houses and then presented to the president. If the president then vetoes the resolution (which would likely happen since the agency passing the original rule is part of the executive branch), a two-thirds majority vote in both houses is needed to override the veto.
The 60 days refers to 60 “session days” in the Senate or “legislative days” in the House. These are not calendar days – these are days in which the Senate and House are actually in session. Therefore, since the DOL rules were published on May 23, 2016, the clock began to run on that date and Congress would have 60 session (or legislative) days to pass a resolution to invalidate them. If that were to happen, President Obama would almost certainly veto the resolution and, given the current make-up of Congress, a two-thirds override would be almost impossible to achieve.
Under this scenario then, it would seem that the new rule could not be invalidated in the present session of Congress, and the new administration would have to “restart” the rulemaking process by drafting and proposing new rules once they take office. Under the Federal Administrative Procedures Act, the typical rulemaking process takes more than one year to arrive at new, final rules. As such, the present rule requiring a salary of $913.00 per week for exemption would be with us for at least a while.
What Might Happen in the New Administration?
But wait – it is not altogether clear that there will be 60 session/legislative days from May 23 until Congress adjourns. Between the long summer recess and our lawmakers’ penchant for light work schedules, 60 days have not yet elapsed since the DOL rule was published. Therefore, if our Republican-controlled Congress decides to adjourn before the end of the 60-day period, the newly seated 2017-2018 Congress will be granted a brand new 60 session-day time frame to disapprove the DOL regulations.
Would this be a strategy that our current Congress employs? If so, it might be the first time that Congress has ever adjourned early just for the purpose of invalidating an agency rule. Indeed, the CRA has been used successfully only once in the 20 years since it was enacted (to invalidate an OSHA ergonomics regulation in 2000). Still, it is a tactic that could be considered and if the new Congress then successfully passes a resolution invalidating the rule, President-elect Trump would have an opportunity to sign it into law.
Even then, that isn’t the whole story. While President-elect Trump has stated that he will “[a]sk all Department heads to submit a list of every wasteful and unnecessary regulation which kills jobs, and which does not improve public safety, and eliminate them…” he has not ever actually expressed his interest in turning back the DOL overtime revision. In fact, he has gone on record as favoring “a small-business exemption” from the DOL Overtime Rule. He certainly could change his mind on this but at present, it does not seem to be very high on his list of priorities, and it is quite possible that the new administration would not wish to be responsible for encouraging employers to roll back the salary increases that so many employees have recently received in order to remain exempt.
As a practical matter, it is very important that even if the new rule is addressed in the next session of Congress, nothing can happen until the members are seated and the new president is inaugurated. This means that at a bare minimum, we will have almost two months after December 1 in which the new rule will be in effect, and perhaps much longer if Congress chooses not to address this issue until later in the 60 session-day period. During that time, employees will have the legal right to be paid overtime if they do not meet the new salary threshold. Therefore, even the most optimistic employer should anticipate the need to comply with the new rule starting December 1 and then wait to see if and when that obligation changes under the new administration.
By the way, there is yet another possible outcome to all of this. The attorneys general for 21 states have joined together in a lawsuit seeking to stop the new regulation from becoming effective, and a hearing is set for November 15 for a federal judge in Texas to consider a nationwide injunction against the effective date of the new rule. While many observers doubt the chances that this lawsuit will prove successful, it warrants attention as another critical factor to watch in all of this.
Bottom Line
We need to know if the current session will hit the 60 day mark. If it does, then the new DOL rules likely will be with us for at least a year and possibly longer as the Trump administration and/or the new Congress decide whether to address them. If the session adjourns before the 60-day mark, action could be swifter. Even then, not swift enough to keep us from needing to observe the new rule starting December 1.
There, is that clear?