United States: New Rules, New Secretary? As Spring Inches Closer, We're Getting Warmer.

Last Updated: February 9 2017
Article by Kevin M. Young

Will the Department of Labor's new overtime rule go into effect? When will a new Secretary of Labor be confirmed? We don't have the answers just yet, but a lot has happened over the last few weeks to inch us closer. As things heat up, we wanted to update our readers on all the latest.

Where Do Things Stand in the Fifth Circuit?

As our readers know, Judge Amos Mazzant, a federal judge for the Eastern District of Texas, entered an order preliminarily enjoining the DOL's new overtime rule on November 21, 2016, just days before the rule was set to take effect. The government (i.e., the defendants in the Texas litigation) appealed the order to the Fifth Circuit ten days later.

Early in the appeal, the government convinced the Fifth Circuit to address the appeal on an expedited basis. Under that schedule, briefing would have ended this week.

Under a new administration, however, the government subsequently filed an unopposed motion to extend the same briefing schedule that it previously sought to expedite so that it could reconsider the positions it has taken thus far. Late last week, the Fifth Circuit granted the motion, extending the briefing schedule to March 2.

Many employers want to know when the appeal will be decided. The answer remains unclear. Under the expedited schedule, the appeal would have been fully briefed this week and oral argument, if any, likely would've taken place within the next two or three months. All of that is pushed back now. Moreover, with all signals suggesting the DOL's presumptive new leadership will take a different approach, the likelihood of there being an appeal to be orally argued is lower today than it was a few weeks ago.

How About the Rest of the Case in the Eastern District of Texas?

While many have turned their focus to the Fifth Circuit appeal of District Judge Mazzant's preliminary injunction order, there remain two fully-briefed motions before the judge, either of which could have an enormous impact on the case: (1) the AFL-CIO's motion to intervene as a co-defendant to defend the new rule; and (2) the business and state government plaintiffs' motion for summary judgment.

If the AFL-CIO is permitted to intervene as a defendant, it could become more difficult for the plaintiffs to work with the government to end the proceedings altogether (which the parties might do if the union were not involved). Even if the government wanted to lay down its shield and settle the case, the AFL-CIO would still be there to defend the new rule. It's important to note that an order denying intervention would be immediately appealable.

The plaintiffs' summary judgment motion could be even more impactful. If the district court grants the motion, that would end the case: the new rule would be invalidated, the litigation would end, and the AFL-CIO would have no case to defend. Sure, an order granting summary judgment can be appealed—but who is going to file the appeal? It's hard to imagine the new DOL leadership (or anyone else in the new administration) doing so. And it's too soon to say whether the AFL-CIO would go it alone.

Speaking of DOL Leadership, When Will We Have a New Labor Secretary and How Might That Impact the Litigation?

Secretary of Labor nominee Andrew Puzder's confirmation hearings have been pushed from Thursday, February 2 to Tuesday, February 7. With that delay, the extension obtained in the Fifth Circuit is more important, as it will give Mr. Puzder additional time to get through confirmation, land in office, and execute on any plans concerning the overtime exemptions.

While Mr. Puzder's immediate priorities are not yet known, the public certainly has insights into his views on core issues, including the new overtime rule. After all, Mr. Puzder has been a prominent commentator on wage and hour issues, including on his blog; in his book, Job Creation: How It Really Works and Why Government Doesn't Understand It; and in the press.

Based on prior statements, Mr. Puzder certainly seems to share the new administration's view of an over-regulated labor market, with the new overtime rule being a prominent example. He wrote in a May 18, 2016 opinion column for Forbes:

The real world is far different than the [DOL]'s Excel spreadsheet. This new rule will simply add to the extensive regulatory maze the Obama Administration has imposed on employers, forcing many to offset increased labor expense by cutting costs elsewhere. In practice, this means reduced opportunities, bonuses, benefits, perks and promotions.

And with respect to the federal minimum wage, Mr. Puzder has signaled possible support for an increase, but certainly not to the double-digit threshold that many advocates have lobbied for (and successfully achieved in various cities and states). He explained to Fox Business on May 31, 2016:

[Those demanding a $15 minimum wage] should really think about what they're doing. There are solutions to this problem, and increasing the minimum wage is not the best solution. If we are going to increase the minimum wage at all, we've got to keep a lower minimum wage for entry-level workers, or these people are just going to be shut out of the workforce....The [Congressional Budget Office] came out with a report last year that said you could raise the minimum wage to about $9 without much impact on jobs, and you probably could do that....

Parting Thoughts.

While it's difficult to know how all of this will unfold, it seems clear that the next couple months could be quite momentous at the district court level, the appellate level, and in Washington, D.C., where new DOL leadership should soon take the helm. We at the Wage & Hour Litigation Blog will, of course, continue to keep our readers apprised of the latest developments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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