Yes, Companies Need to Keep Preparing for the New Overtime Rule.

A change from a Democratic to a Republican administration is going to bring changes to many areas of labor and employment law. As a general practice, Republican administrations tend to have less aggressive federal agency enforcement and more "business-friendly" policies and practices. But these changes take time. In the meantime, employers are facing a December 1 deadline for the implementation of the new overtime rule. As we have told you in previous blog posts, under the new rule, the minimum weekly salary that an otherwise exempt executive, administrative or professional employee must receive for the employer to be relieved of the obligation to pay overtime will rise from $455/week to $913/week ($47,476 per year). Many companies already have acted to adjust worker salaries or hourly rates to prepare for this change.

The current Solicitor of Labor has stated that the DOL intends to go forward with implementation of this new rule. Several bills to delay or stop the overtime rule are pending before Congress and could get considered in the lame-duck session, but they all face a certain veto from the President Obama. However, there is a pending federal court case in Texas where 21 states are seeking a preliminary injunction that would block the DOL's overtime regulation from taking effect. A hearing is scheduled for November 16 in that case. At this point, such an injunction is the only way the rule will not be implemented on time.

Will the Trump administration repeal this rule? A Trump administration could try to overturn the new salary basis test through another Labor Department regulation, but that rulemaking process could take at least two years. By that time, employers would have made the changes necessary to comply. Few employers will want to take back any pay increases that they have given to employees.

Alternatively, Congress could act to delay or overturn the regulation. A bill to delay or rescind the rule passed during the Trump administration probably would be signed by Trump. But again, by that time, employers will have already made the necessary changes to comply.

The most likely scenario is that the provision of the rule that indexes the salary threshold every three years with inflation will be eliminated or changed. Whether the entire rule is repealed remains to be seen. A repeal of the regulation means that the Trump administration must tell 4.2 million Americans who are getting overtime that they are now no longer eligible for overtime.

The takeaway: In the meantime, it is not a good strategy to ignore the implementation of the new overtime rule based upon the belief that the Trump administration is going to repeal it. As noted above, any such change is going to take time. Even if the new Trump DOL fails to aggressively enforce the new rule in the interim, there will be plenty of plaintiff's employment lawyers who will be glad to pick up the slack and file claims on behalf of individual or collective clients. A company that loses such a lawsuit risks being liable for damages in the form of payment of unpaid overtime, with interest (and doubled if the failure to pay overtime is deemed willful) and costs and attorneys' fees—the plaintiff's and the company's. Is that a risk your company is willing to take?