President Barack Obama likes to say he’ll use the power of the pen to do whatever he can for American workers. But now that Donald Trump has won the White House, the real estate mogul can use the same pen to undo one of Obama’s most far-reaching reforms: bringing overtime protections to millions of workers.
Most hourly workers in the U.S. are automatically entitled to time-and-a-half pay when they work more than 40 hours in a week. But because of the way the rules have been written, millions of salaried employees like retail store managers and white-collar professionals haven’t enjoyed the same rights. That’s given employers an incentive to work those employees longer hours at the same base salary.
Earlier this year, the Obama administration overhauled those rules for the first time in years. Under the changes, far more employees who work on salary will be guaranteed overtime when they work extra hours.
The administration achieved that by raising what’s known as the “salary threshold.” All workers paid salaries below the threshold are entitled to time-and-a-half pay when they top 40 hours. The previous threshold was just $23,660. The new one is $47,476, or roughly double. That means just about any salaried worker earning less than that is ripe for overtime pay, regardless of their job duties, as of Dec. 1.
But all of that is now in limbo after the election. Republicans or the Trump administration could undo the changes though it wouldn’t be easy.
Faced with higher labor costs, business groups have fought the overtime reforms ever since the White House first floated them. The changes leave businesses with a difficult choice: Either limit eligible workers’ hours to 40, or be ready to start paying a premium on their labor. The Obama administration hopes that dilemma will leave workers with either bigger paychecks or shorter workweeks and a better work-life balance. Employers simply see higher labor costs.
By the White House’s estimate, the changes are bringing overtime protections to an additional 4.2 million workers, though some economists anticipate the real number will be even greater. Under the new rules, the Labor Department will update the salary threshold every three years to make sure it keeps pace with inflation and that the share of salaried workers getting overtime pay doesn’t fall.
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After they were rolled out, business groups sued to block them from going into effect. Tom Perez, the labor secretary, told HuffPost last month that the administration likes its chances in court, where the case is now playing out. But the greater threat now comes from President-elect Trump and the GOP-controlled House and Senate. There are a few ways one of Obama’s signature achievements could be wiped out or neutralized.
Republicans could potentially pass a law that kills it. Both chambers have already had their sights on the reforms. The House majority passed a bill last month that would delay it from going into effect, and Senate Republicans have previously passed a motion of disapproval trying to block it. A Democrat in the White House assured that any such bill would be vetoed if it reached the president’s desk. The only thing standing in the way of repeal by Republicans now is a Democratic filibuster in the Senate.
A filibuster would leave Republicans relying on the appropriations process to halt the reforms, said Ross Eisenbrey, vice president of the Economic Policy Institute, a proponent of the overtime changes. Congress could attach a “rider” to a spending bill that prevents the Labor Department from enforcing the overtime rules. In that case, Eisenbrey said, it would fall to businesses to observe the new rules voluntarily, “and businesses would feel compelled to comply.”
“But, eventually,” Eisenbrey adds, “a Trump [Labor Department] will issue a new regulation to reverse it.”
In other words, if Congress doesn’t block the reform on its own, Trump could write his own reform that undoes Obama’s. That’s one of the inherent limitations of executive action: It can be reversed by a subsequent administration.
Trump has made clear that he intends to undermine much of Obama’s legacy, from Obamacare on down to more modest regulations, and the Trump transition team has called for a moratorium on new regulations. This is not a simple route, however. It requires crafting a new rule that must then undergo public comment a process that can take months and even years.
As Politico reported Monday, there’s also the outside chance that Republicans could scuttle Obama’s reform using the Congressional Review Act, a rarely successful maneuver. That tactic hinges on whether the GOP can tighten up the congressional calendar before the holidays. (Politico has an explainer here.)
But if he really wants to reverse Obama’s overtime expansion, the toughest hurdle for Trump might be a political one. He campaigned as a president for the working class. After being told they will have new overtime protections, millions of workers won’t like to hear “just kidding.” Reversing the reforms would undermine Trump’s claims that he’s a president who will raise wages for low- and middle-income workers.
“While reducing [the salary threshold] may not be troubling for a lot of Republicans in Congress, it would make Trump’s attempts to reach out to the working class look a little hollow,” said Marcia Goodman, a lawyer at Mayer Brown who handles employment cases.
Goodman isn’t convinced that Obama’s overtime reforms will be erased. After all, many companies have already started adjusting to them, thanks to the Dec. 1 deadline. And even with the uncertainty of an incoming administration, she expects employers will act as if the rules are here to stay, at least for the time being. Walmart, for one, already announced that it will be raising its managers’ pay above the threshold to avoid paying overtime an announcement that would be hard to walk back.
“Don’t hold me to any predictions,” Goodman said. “My own view is that there’s going to be a lot for the Trump administration to address in terms of things they want to do differently. They won’t be so eager to spend a lot of time and effort repealing this rule that has gone into effect. I just think that’s not where the priorities will be.”