After Donald Trump’s election last week, a number of U.S. business owners breathed a sigh of relief, believing that the December 1st deadline for implementing the new overtime threshold required by the Department of Labor had just been postponed — if not cancelled entirely.
In a statement during his campaign, Trump told Politico that he would “love to see a delay or a carve-out of sorts” for small businesses in implementing the new Fair Labor Standards Act overtime regulations.
However, while Trump is on record saying he will appoint a Secretary of Labor who will dismantle many of President Obama’s employment initiatives, business owners shouldn’t be so quick to assume an immediate turnaround.
Trump won’t officially become president until January 20, 2017 — and the new overtime rule goes into effect nearly two months earlier, on December 1, 2016.
But more importantly, dismantling that rule isn’t on Trump’s list of top priorities at the moment. On November 9th, NPR released an article detailing Trump’s plans for his first 100 days in office — and while “protecting American workers” is a central part of that plan, Trump doesn’t say anything about the DOL or FLSA — or the new overtime rule.
Employment law experts find it unlikely that the deadline will be postponed. “There are very few legal remedies that can halt the implementation in 3 weeks time,” says employment attorney Maria O. Hart. “The election may have altered the political landscape of the country, but it has not altered the legal processes in a court of law — and those take time. Businesses should still be prepared to comply with the new rule come December 1.”
Of course, that’s not to say that it can’t happen. Jose Klein of Fisher Phillips says, “Presidents have been making rules about overtime since the FLSA passed.” However, he cautions, “It would have to go through the rulemaking process — which would take several months at minimum, and potentially years to go through.” And during that period, business owners will still need to comply… or face the costly penalties of an FLSA lawsuit.
The main takeaway for business owners? “Until there’s a different rule in place,” says Klein, “business owners have an obligation to comply.”
And if you’re still holding out for a rule reversal, seriously consider this: “The penalties for failing to pay overtime or any other kind of failure to comply with the FLSA are incredibly onerous and hazardous for employers,” says Klein. “I would strongly advise business owners not to wait to make changes when it comes to compliance or bank on the rule being reversed. Employers should expect it to go into place, and plan for it to go into place.”
Whether or not the overtime threshold is raised permanently, the principles that cause FLSA violations remain the same. Business owners have paid fines amounting to $1.5 billion for wage and hour lawsuits in lawsuits through the DOL since 1995. And a record 8,781 lawsuits have been filed in 2016 alone.
It’s crucial to keep in mind that current misclassifications were the origin of the new overtime regulations. As far as the DOL is concerned, an estimated 8 million employees are misclassified today — employees who can (and probably will) file a wage and hour claim against employers who refuse to comply with the FLSA, regardless of new regulations.
Here are the critical actions business owners should take not in effort to avoid a wage and hour lawsuit:
- Ensure employees are classified correctly based on job duties
- Track employee time (even if salaried) to accurately compensate employees for hours worked
- Communicate and enforce clear policies about off the clock work and overtime
- Maintain accurate and electronic records that are easily accessible
For business owners who are concerned about rolling out big changes now that might turn out to be overkill down the road if the new FLSA rules are overturned, the answer lies somewhere between sweeping changes and inaction. Speak to an employment attorney at Emery Reddy to determine the minimum viable action your company must make to comply with the new regulations — and the old regulations, which won’t disappear anytime soon. Consider taking conservative measures to comply, and look at your company for shortcomings that have the potential to trigger a lawsuit under the old and new regulations.
In short, don’t leave your business in a position of risk up til the 11th hour by waiting until the December 1 deadline to make changes. Regardless of the future of rules around overtime pay, and regardless of whether Trump ultimately cans the overtime ruling, business owners should maintain a focus on FLSA compliance — or risk a costly lawsuit in 2017 and beyond.