Finance News & Insights

Ex-DOL admin offers alarming preview of what could happen with new OT rule

While the majority of industry experts expect the DOL to create a new overtime rule that sets the salary threshold somewhere in the $33K ballpark, there’s at least one person who sees a scenario where employers will have to comply with the originally proposed $47K threshold. And there’s good reason to take what she says very seriously. 

That’s because the person we’re referring to is Tammy McCutchen, a former DOL administrator and current principal at Littler Mendelson who helped write the last round of changes to the DOL’s overtime regs.

At the Society for Human Resource Management’s (SHRM) 2018 Employment Law and Legislative Conference, McCutchen said she sees a perfect storm of factors that could lead directly back to where we started in the overtime-change drama: An FLSA reg requiring all employers to pay overtime anyone making less than $913 per week or $47,476 per year.

For starters, there’s the whole injunction thing. As we’ve covered previously, the injunction essentially called into question the DOL’s ability to a salary threshold as high as it did in the first place. According to HR Dive, McCutchen said she was “worried because we still have [an] active 5th Circuit appeal.”

That’s a legitimate concern, but if the Trump DOL proposes a new OT rule while the Obama-era one is stayed, wouldn’t that essentially take care of the appeal concerns?

Unfortunately, it’s not that simple. As things currently stand, the DOL is expected to propose its latest changes to the overtime rule in October. But the agency has never been known for its expediency. As McCutchen puts it, reg deadlines “are never met … ever. If they publish [the proposed rule) October 2018 it will be a freaking miracle.”

So assuming the agency does pull off a “freaking miracle” and gets the regs proposed by October, that puts the final rule into effect in late 2019 — assuming things are running on schedule.

‘All of a sudden we’re in 2020’

Now here’s where things can go off the rails, according to McCutchen. If there is a delay in the DOL’s overtime rulemaking process, then “all of a sudden we’re in 2020.”

McCutchen put forward the following hypothetical to illustrate why this is so important:

“What happens if Republicans don’t win back the White House [and still don’t have] a new final rule? You’ve got the 5th Circuit appeal alive and well, and now that DOL is going defend that [$47K] salary level very vigorously.”

If that happens and the 5th Circuit lifts the injunction, a mandate would follow within 30 days and, McCutchen says, employers would have to be in compliance.

While HR pros wait this out, McCutchen offers the following advice to employers: “If you have plans [for complying with the Obama-era OT regs] that you didn’t implement, I hope you didn’t throw them away.”

Because if McCutchen’s perfect storm does hit, those OT compliance plans you worked so hard on a few years ago will certainly come in handy.

This story was originally published on our sister website, HR Morning.

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