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Fresh off the results of yesterday’s historic election, employers are faced with a long list of potential questions about what a Trump Administration will mean for them and what effect it may have on Obama Administration laws, regulations, and executive orders. For many employers, foremost among these are questions about any potential change to the U.S. Department of Labor’s final FLSA rules for white collar exemptions, which are scheduled to take effect on December 1, 2016. We have previously provided guidance on those rules here.
Although Congress has considered legislation to delay the regulations, that legislation is unlikely to gain sufficient support (or President Obama’s signature) to alter the near term compliance deadline. Also, late last month, 21 states sued the U.S. Department of Labor, claiming that it lacked sufficient statutory authority to issue the final rules. The states’ consolidated lawsuit, State of Nevada v. U.S. Department of Labor, No. 4:16-cv-731, is pending in the Eastern District of Texas before U.S. District Court Judge Amos L. Mazzant, III, who was appointed to the bench by President Obama in 2014. As part of their claims in the case, the states have filed a motion asking the court to enter an injunction halting the implementation of the final rules. The court has scheduled a hearing on that motion for November 16, 2016, just two weeks before the December 1 compliance deadline.
Some employers have theorized that the election results may pave the way for the Texas federal court to enter an injunction that halts or delays the implementation of the final rules until such time as a new administration has the opportunity to reconsider those rules. Court watchers suggest that such an injunction seems unlikely from an Obama appointee. Whether a Trump Administration would alter the rules also remains in doubt. President-elect Trump’s only public comments on the final white collar exemption rules, reported here by Politico, have been vague at best. Trump stopped short of opposing the rules, but rather (one month after stating he would support a minimum wage increase to $10/hr) Trump commented that he is in favor of creating a small business exemption or delay in the final FLSA white collar rules for certain small businesses.
We think the only prudent course of action is for employers (of all sizes) to continue to work toward implementing a compliance strategy with the final rules in time for the December 1, 2016 effective date. For smaller or more nimble organizations that are reluctant to implement compliance with the rules and have the ability to delay implementation, we recommend closely monitoring the Texas federal court case and the results of the oral argument on November 16. Still, court orders can move slowly, and with Thanksgiving week falling between that hearing and the December 1 effective date, it remains possible that the court will not issue a ruling in time for employers to adjust their compliance strategy accordingly.
We will promptly report on any significant change regarding this compliance deadline. If you have questions about your FLSA compliance strategy, please contact your Maynard Nexsen employment attorney.