Trump faces tough decision on overtime rule

Trump faces tough decision on overtime rule
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The fate of the Labor Department’s overtime rule could fall into Donald TrumpDonald John TrumpIran claims it rejected Trump meeting requests 8 times ESPY host jokes Putin was as happy after Trump summit as Ovechkin winning Stanley Cup Russian ambassador: Trump made ‘verbal agreements’ with Putin MORE's hands, leaving the president-elect with one of the toughest early decisions of his administration.

President Obama claims the rule could help lift more than 4 million workers and their families out of poverty. But Republicans are fiercely opposed, claiming it would hurt small businesses.

Now Trump could be forced into the difficult position of backing his party and potentially alienating the working-class voters who elected him to power.

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“This might drag out into the change of leadership in Washington, and it’s possible a Trump administration could abandon the overtime rule,” said Gerald Hathaway, partner at the New York law firm Drinker Biddle & Reath, about the fight.

Currently, employees who work more than 40 hours in a week are eligible for overtime pay, but only if they make less than $23,660 per year. The Obama administration is aiming to double the salary threshold to $47,476, so that more workers qualify. The rule is being challenged by a number of business groups and 21 states.

On Tuesday, a federal judge in Texas issued a temporary injunction blocking the rule from taking effect on Dec. 1 as planned. Judge Amos Mazzant has yet to issue a final decision in the case.

The Labor Department could appeal the injunction to the Fifth Circuit Court of Appeals and request an expedited decision. But that would only address the temporary delay — not the larger case on the rule's merits.

Ryan Glasgow, a partner at the Washington, D.C., law firm Hunton & Williams LLP predicted the judge would ultimately overturn the rule "unless he does a total 180." But even his final decision would be subject to appeal.

That timeline makes it likely the case could linger into the Trump administration.

If Trump is in office, he could decide to kill the rule by instructing the Labor Department's lawyers to stop their court defense, lawyers said.

And even if the rule survives the court challenge before Trump takes office, Republican lawmakers could turn to the Congressional Review Act to overturn it. The act allows lawmakers to disapprove of regulations that were recently issued, effectively blocking them.

In both cases, Trump faces a challenging decision — whether to back Republican calls to roll back the overtime rule.

Trump has vowed a massive effort to roll back a number of regulations from the Obama administration. On the campaign trail, he also cited the overtime rule as one of the regulations he would hope to undo.

“Rolling back the overtime regulation is just one example of the many regulations that need to be addressed to do that,” Trump told Circa in August. “We would love to see a delay or a carve-out of sorts for our small business owners."

But it could be politically costly, with labor groups likely to hammer Trump.

Supporters of the rule are already warning Trump against scrapping the overtime regulation.

Robert Weissman, president of Public Citizen, said Trump would be “betraying” workers if he did.

“The theme of Trump’s campaign was to help raise the living standard for working-class people, and this rule does that,” Weissman said. “The only question is whether Trump will deliver on his promise or betray them.”

Weissman said that some businesses have already begun following the rule.

“It would be quite difficult to take those salary increases away that have already been granted,” he said.

Trump, though, would also face pressure from Republicans as well and business leaders who have spearheaded the legal fight.

“Politically, it’s more dangerous to just get rid of the overtime rule than it would be to come up with a more reasonable level,” Alexander Passantino, a partner at Seyfarth Shaw who formerly worked in the Labor Department under President George W. Bush, told The Hill.

Passantino floated lowering the threshold from Obama's level to $30,000 for overtime as an effective compromise.

“Most of the outcry from the business community has been that it is too far, too fast,” he said, suggesting Trump has room to maneuver. “A smaller increase would not have been met with the same level of opposition.”