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Is a new regulation in the works?
New developments on the overtime rule could be brewing, as the U.S. Department of Labor (DOL) on June 27 sent a request for information (RFI) on the 2016 overtime rule to the Office of Information and Regulatory Affairs. Generally, such requests signal that a government agency is looking for information to determine whether there is a need for a new rulemaking. But the text of the RFI has not been published publicly, and more rulemaking on overtime isn't a given.
"The significance is really twofold," said Alfred Robinson Jr., an attorney with Ogletree Deakins in Washington, D.C., and former acting administrator of the Wage and Hour Division. First, as Secretary of Labor Alexander Acosta testified in early June at a budget hearing before the Appropriations Committee for the U.S. House of Representatives, the DOL is going to address certain aspects of the currently blocked overtime rule.
"Secretary Acosta noted that the 2016 salary level of $47,476 per year was problematic," with many employers and business groups saying the increase from the old level of $23,660 was too high and too quick, Robinson said. "This RFI should lead the DOL to submit a notice of proposed rulemaking and, ultimately, a new final rule that contains a more reasonable salary level."
The RFI may also address a nationwide preliminary injunction preventing the DOL from enforcing the salary requirement, he added.
[SHRM members-only toolkit: Determining Overtime Eligibility in the United States]
In the waning weeks of the Obama administration, the Labor Department appealed the preliminary injunction issued by the District Court for the Eastern District of Texas. That appeal is still pending before the 5th U.S. Circuit Court of Appeals and the DOL has been given three extensions since the inauguration of President Donald Trump to file its reply brief.
"The latest extension gives the department until June 30 to file a reply brief, so this RFI publication may play a pivotal role in new developments with the litigation. This could include the distinct prospect that the courts may defer making any decisions if DOL is going to embark on a new rulemaking," he said.
"I think the request for information and the additional opportunity for public comment certainly signals that the DOL is at least considering doing something with the Obama administration's overtime rule other than either continuing the legal fight in support of the rule before the 5th Circuit Court of Appeals or abandoning the current appeal of the injunction blocking the rule and letting the rule die on the vine," said Brett Coburn, an attorney with Alston & Bird in Atlanta. "Secretary Acosta indicated during the Senate confirmation process that he might be open to a smaller increase in the minimum salary threshold for the white-collar exemptions, and this move may very well be the first step in that direction. If that is the direction the DOL ultimately decides to go, they most likely would go through additional rulemaking to get to a set of revised regulations that include a more modest increase in the salary threshold than the Obama administration's rule."
No Requirement Anything Be Done
However, Alexander Passantino, an attorney with Seyfarth Shaw in Washington, D.C., and former acting administrator of the Wage and Hour Division, cautioned, "A request for information is just that. The department will be asking the regulated community for input on the issues in the RFI," he noted.
"The RFI is interesting in that it will be asking questions about a final rule that was a couple of weeks out from its effective date when it got stopped—temporarily, for now—by a federal judge," Passantino noted. "This allows the department to ask questions about the actual impact of the salary increase to employers—or at the very least, [to get] more precise information about what the impact would have been."
He added, "Because we were so close to the effective date, many employers either had already implemented the salary increase or were very, very close to doing so. The information that employers will be able to provide is real—as opposed to hypothetical/speculative information provided in the original rulemaking process."
Passantino said more rulemaking is certainly a possibility, but noted that there is no requirement that anything be done. "If there is a large outcry about the $47,476 salary level from state and local governments, the education sector, or not-for-profit organizations, we might see the department withdraw the current rule and issue a revised rule with a lower salary level," he noted. "If, on the other hand, there are few comments detailing the pain caused by the salary level, the department might just choose to leave it alone," in which case the Texas court's blocking of the 2016 overtime rule might become permanent.
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