How the Trump Administration MIGHT Change the Labor and Employment Landscape with the Stroke of a Pen

By Sean R. Gallagher and Mary E. Kapsak

After the inauguration in January 2017, President-elect Trump will be presented with a number of regulatory issues that can change the labor and employment landscape. Congressional and administrative action are not required to effect all such changes in the way the federal government regulates private employers. Rather, the new administration can make significant and lasting changes in employment enforcement at certain federal agencies, including the Equal Employment Opportunity Commission (EEOC), the Department of Labor (DOL), the Occupational Safety and Health Administration (OSHA), and the National Labor Relations Board (NLRB). In this and upcoming blogs, we will examine ways in which the new administration can quickly and dramatically pivot the landscape of labor and employment laws simply by changing enforcement and litigation priorities. This first blog focuses on changes that might be made at the U.S. Department of Labor. 

Department of Labor

Mr. Trump named Andrew Puzder as his pick to lead the U.S. Department of Labor (DOL). Mr. Puzder, the chief executive officer of the company that owns Carl’s Jr and Hardee’s restaurant chains, in his role as a business owner, has criticized higher overtime pay rules and opposed increasing the minimum wage to $15 per hour. The DOL could alter course for key priorities of the prior Obama administration: the Fair Labor Standards Act (FLSA) overtime rules, the “persuader rule,” and the fiduciary duties for retirement advisors.

FLSA Overtime Rule

On May 18, 2016 the Department of Labor published a new final rule updating the nation’s overtime regulations, which would automatically extend overtime pay protections to over 4 million workers if fully implemented. In November, 2016, a federal judge in Texas issued a nationwide injunction halting enforcement of the rule. That decision is currently being appealed by the Obama administration to the 5th Circuit Court of Appeals. The Trump administration could effectively terminate the litigation and end the overtime rule by withdrawing the government’s appeal, and thus leave the lower court’s decision intact. 

This course of action may be in the cards. Mr. Puzder has expressed his dislike of the new rule and “has argued that the Obama administration’s recent rule expanding eligibility for overtime pay diminishes opportunities for workers.”  The U.S. Court of Appeals for the Fifth Circuit granted an expedited appeal on the issue, with oral argument to be scheduled after January 31, 2017. With oral argument scheduled after the inauguration, the DOL, under the leadership of Mr. Puzder, could reverse position and withdraw the appeal before the court hears oral argument. If so, the injunction would stand and the new overtime rule would not take effect. 

Persuader Rule

Similar to the overtime rule, the DOL currently faces an injunction barring the “persuader rule” from taking effect. The persuader rule “requires that employers and the consultants they hire file reports not only for direct persuader activities – consultants talking to workers – but also for indirect persuader activities – consultants scripting what managers and supervisors say to workers.” The U.S. District Court for the Northern District of Texas issued a preliminary injunction on June 27, 2016 and recently issued a nationwide permanent injunction against the rule on November 16, 2016. The DOL can appeal the permanent injunction to the Fifth Circuit, but even if it does, the Trump administration will have time to withdraw the appeal before it reaches a decision by the appellate court.

Fiduciary Rule

The Trump administration could also change course for the DOL’s new fiduciary rule, which requires financial advisors to act in the best interest of their clients with respect to retirement accounts. The DOL issued the final rule on April 6, 2016, to be applicable April 10, 2017. Although Mr. Puzder has not yet voiced an opinion on the fiduciary rule, his general remarks about less government regulation makes some experts believe the new administration “will kill or significantly weaken the fiduciary rule.” Edward Mills, an analyst at FBR & Co., “predicts the new administration will first delay the implementation of the rule through an administrative action and then repeal or overhaul it.”  Since the DOL has already issued a final rule, the new administration would have to go through the onerous public notice and comment process prior to making any changes. Although the fiduciary rule was not directly addressed during the campaign, an advisor to President-elect Trump suggested the President-elect could seek to reverse it. Republicans in Congress have expressed their desire to do so as well.

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