Finance News & Insights

Dems have a plan if Trump succeeds in killing new OT rule

Do the Democrats have a backup plan for the DOL’s new overtime rule if it dies in court or at the hands of the Trump administration? You betcha. 

As HR Morning has reported (like here and here), the DOL’s new overtime rule doesn’t seem long for this world.

But some employers shouldn’t completely ditch their plans to comply with the new rule — especially those in Connecticut, Maryland, Michigan, Rhode Island and Wisconsin.

That’s because Democratic lawmakers in those states have said they want to introduce bills in the mold of the DOL’s new rule, if the rule doesn’t survive.

And Sam Munger, a senior adviser for the State Innovation Exchange, which promotes progressive legislation, said other states are likely to follow those five, according to a report by Bloomberg.

The problem for Dems: Control

Democrats may find it hard to gain traction at the state level, however, as Republicans have control of the legislative bodies in more than two dozen states. Meanwhile, Democrats have control in just a handful — with Connecticut and Rhode Island among them.

As a result, Democrats may be looking at the kind of slow-spreading, scattered legislative process that is occurring with minimum wages and paid leave benefits.

Unable to gain momentum on the federal level, local legislators are adopting higher minimum wages, as well as paid leave regulations in a patchwork fashion.

Currently, a majority of states have a minimum wage threshold greater than the rate set by the feds. And several cities now require employers of a certain size to provide workers with paid sick and/or paternal leave benefits.

The problem for employers state-by-state compliance

Why should employers care about this? Because more stringent state laws tend to trump federal law. So although employers are unlikely to see the DOL’s new overtime rule pass muster under a Trump administration, they should keep a watchful eye on what’s happening on the state level.

As you can image, a patchwork-style adoption of a DOL-esque overtime rule could be very problematic for employers. Multi-state operations could face having to abide by more stringent overtime regulations in some states or cities than others. This could cause a significant strain on employers’ administrative processes.

Another possibility

One more thing to keep in mind: If there’s a groundswell of support across a large swath of states for a rule similar to the DOL’s, some on Capitol Hill believe the Trump administration may look into revising the Fair Labor Standards Act (FLSA) to find some middle ground between existing regulations and the DOL’s new rule.

Even the business groups who initiated the lawsuit to block the DOL’s rule have said they’d be interested in revising the FLSA — just not to the extent that the DOL tried to do under the Obama administration.

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