Trump Admin’s New Overtime Rules
Back in May, 2016, the Obama administration’s Labor Department issued new rules concerning overtime pay for millions of workers. There are three components to whether an employee is eligible for overtime. The first is whether the employee works on an hourly or salaried basis; second is a basic salary level below which an employee must be paid overtime; and the third considers the duties of the work performed, with executives and administrators being exempt.
Over the years, the definitions of what is considered an exempt decision-making position has been consistently watered down, allowing companies to exempt workers who still spend a majority of their time doing regular work and a fraction of it in managerial activities. The classic example of this is the so-called “manager” in a fast food restaurant.
While the allowances for exempting overtime have increased, the salary level test had actually been cut in half on an inflation-adjusted basis. If the salary level from the mid-1970s, when 60% of American workers qualified for overtime as opposed to the current 7%, had kept pace with inflation, it would be in the low $50,000 range.
For the first time in over a decade, the Obama administration raised the salary level, more than doubling it from around $23,000 to over $47,000. In an important addition, the new rule mandated that the salary level be adjusted for inflation every three years going forward. The Labor Department opted not to address any changes to the exempt duties regulations. The rules, which were estimated to raise the wages of over four million workers, were expected to become effective on December 1, 2016.
However, with just a week before the rule was set to go into effect, a federal judge in, you guessed it, the Fifth Circuit, issued a nationwide injunction blocking implementation of the rule in a challenge brought by the Chamber of Commerce and the AGs of 21 states. His reasoning, such as it was, was that the salary level was so high that it effectively negated any consideration of the other two components of overtime eligibility. In fact, The Labor Department had specifically considered such a possibility and showed that the higher salary threshold was still below the median salary level for so-called supervisory workers compiled by the Bureau of Labor Statistics and well within the guidelines used for establishing the level by the Eisenhower administration in the 1950s and by the Ford administration in the 1970s. The Obama administration appealed that injunction but that seemingly became moot when Trump assumed office.
Considering the Trump administration’s aversion to all things Obama, you might have expected that to be the end of any update to the overtime rules. Remarkably, however, the Trump administration had continued the original Obama appeal of the judge’s decision, primarily to protect the option of establishing its own salary level for eligibility. However, in the summer of 2017, the judge released his full decision which ruled that the Labor Department may only increase the salary level if it is considered in conjunction with the duties performed. He specifically did not prohibit the Department of Labor from setting a new salary threshold, only declared that Obama’s was too high, despite evidence presented by the Labor Department to the contrary. This prompted the Trump administration to reverse course and drop their appeal. However, at the same time, it began work on crafting its own rules for overtime eligibility.
Last week, Trump’s Labor Department unveiled those new rules. They would raise the salary threshold to $35,000, make no changes to the duties exemptions, and specifically not include any ongoing inflation adjustments but instead suggest a review of the rule every four years. This will effect around one million workers, far less than the four million covered under the Obama plan. The new salary threshold works out to be comparable to the “20th percentile of earnings for salaried workers in the South”, traditionally the lowest wage area of the country, which was the method used by the G.W. Bush administration in 2004.
I guess it is remarkable that the Trump administration is pursuing any increase at all, considering its overall hostility to workers. Whether it’s positioning for the 2020 campaign, a reaction to the darkening economic climate, or simply the preference of pedophile protector and Labor Secretary Alex Acosta, who promised to raise the threshold in his confirmation hearings, is impossible to know in the chaotic world of the Trump administration. What it does indicate, however, is that proposing big, progressive policies can move the Overton window far enough to the left that Republicans will occasionally compromise on a position that can almost be described as reasonable.
This ruling will face little of the opposition from the Chamber of Commerce and business groups who have already largely signed off on the plan. And the chances of any of the states pursuing another challenge in the Fifth Circuit is slim and none. This is in stark contrast to the apocalyptic messages from business and the howls of authoritarian overreach that greeted Obama’s overtime rule.
Meanwhile, the original judgement in Texas against the Obama rule still stands as yet another testament to the fact that Democratic presidents are simply not allowed to exercise the power of their office in the same way that Republicans can. Democrats are now apparently not allowed to nominate a replacement to the Supreme Court in the last year of their term. And they are not allowed to implement administrative rules under similar guidelines set by prior administrations if it upsets the business community and red state politicians. Meanwhile, the deeply corrupt Trump presidency rolls right along with its brazen violations of both law and ethical rules, largely uncensured, so far.
Originally published at thesoundings.com on March 13, 2019.
