A Look at Trump's Labor Department

New Labor Secretary Alexander Acosta looks more business-friendly than his predecessor, experts say. But employers shouldn't take anything for granted. For example, the fate of a controversial Obama proposal on overtime pay is still in limbo.

Monday, May 15, 2017
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After months of delay and uncertainty, the nation finally has a new labor secretary. The U.S. Senate on April 28 confirmed President Trump's nominee, Alexander Acosta, who took his oath of office later that day.

This leaves more than a few tough questions for employers to ponder: What will Acosta do with policy proposals left over from the Obama administration?

And, in particular, will the Trump Labor Department pursue or abandon former Labor secretary Thomas Perez's plan to raise the pay threshold for overtime-exempt workers? For businesses, millions of dollars in annual payroll costs depend on the answer. The department has until June 30 to keep alive its appeal of a Texas judge's preliminary ruling last year that would toss out the rule.

Most expert observers expect a more business-friendly Labor Department to take shape under Acosta. But they urge employers not to get sloppy or take for granted. Many expect Acosta will take a moderate policy route than did Perez, as he suggested in his nomination hearings earlier this year.

"I think Acosta meant what he said in the nomination process," says Andrew B. Prescott, an employer-side labor lawyer with Nixon Peabody in Providence, R.I.

"He's prepared to protect worker rights under current law," Prescott says. But when it comes to Labor Department rules and policies, "there will be fewer changes that make life harder for employers" under Acosta.

Dena H. Sokolow, an employment attorney and shareholder with Baker Donelson in Tallahassee, Fla., generally agrees. But she notes that employers must recognize that inertia will keep much the same in the Labor department for some time.

Some Labor officials and policies from the Obama/Perez era are still in place, Sokolow says. And even without active enforcement by the department, workers in many cases can still sue over alleged violations.

Though the department's policies may change, "you still have to be diligent to make sure you're in compliance," she says.

Prescott agrees. "Follow the laws and regulations on the books," he advises. "Don't assume you won't be the object of an audit or enforcement just because there's been a change of leadership."

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Still, "employers are frustrated" by the lack of clarity, Sokolow notes. Of particular concern is the proposed overtime rule, which includes an inflation adjustment that could increase employer costs for years to come. She thinks the Labor Department is likely to withdraw its appeal of last year's adverse court ruling.

Acosta, however, has not offered a definitive opinion on the overtime rule. In his nomination hearing, the secretary-designate suggested that the current overtime threshold -- $23,660 a year -- is too low. He told senators that figure, if adjusted for inflation since the threshold was set, would be raised to about $33,000. That left many observers speculating that the new Labor Secretary could favor a compromise threshold somewhere between the current level and the Obama proposal.

Until Acosta says what he plans to do, Sokolow says, the Obama administration's proposed rule "isn't completely dead," she says. "It's not over."

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