Regulation

Labor groups fear weakening of Obama overtime rule

Keren Carrion

Labor advocates are slamming the Labor Department for taking what they worry are the first steps toward weakening an Obama-era rule to expand overtime pay for some 4 million Americans.

At a House budget hearing Wednesday, Labor Secretary Alexander Acosta said the agency plans to file a request for information and public comments on the overtime rule in the next two to three weeks.

“This signals they want to redo the rule,” Heidi Shierholz, an economist at the Economic Policy Institute said Thursday.

“They are hoping to get information that they can use as legal justification for putting out a new rule that will have a lower threshold.”

{mosads}The rule, which was blocked from taking effect Dec. 1 by a Texas district court order, more than doubles the Fair Labor Standards Act threshold for who can qualify for overtime, from $23,660 to $47,476 a year. 

On Wednesday, Acosta suggested that he supports an increase but thinks the threshold was set too high.

“Any rule that has a dollar amount that hasn’t been updated is a problem because life gets a lot more expensive, but I also think the way that it was done created a shock to the system,” he said.

Shierholz said the announcement marks another broken promise from the Trump administration to help workers.

“This is just the opposite of that,” she said, “This hits at the middle class he really focused on in all his rhetoric. He’s not just turning his back on them, but setting things up to repeal protections already in place.”

It is still not clear what information the Labor Department is seeking on the rule, but advocacy groups are sounding the alarm.

The National Employment Law Center called Acosta’s announcement startling and in a statement on its website urged DOL not to let the information request get in the way of ensuring workers’ pay is protected.

Business groups, meanwhile, called the news a positive step in the right direction.

“We’re extremely glad they are reviewing this issue,” Jack Mozloom, a spokesman for the National Federation of Independent Business, said.

Mozloom said the rule has forced small-business owners to either convert full-time salaried employees back to hourly workers or cut other benefits.

“It’s really a problem out in the part of the country where the cost of living is lower,” he said. “A $47,000-a-year job may not sound like a lot in Seattle, Wash., but in a lot of other places that’s a decent living and a lot of those jobs are in jeopardy.”

Nevada and 20 other states, including Texas, challenged the rule in court last year and a federal judge in Texas blocked it from taking effect.

NFIB hopes the Labor Department will drop its appeal of that order.

But labor groups say the administration stands to lose too much.

Because the judge found that the DOL exceeded its authority by raising the income level for overtime pay, the administration will likely not want to walk away and lose that power, according to Celine McNicholas, labor counsel at the Economic Policy Institute.

“I think it would be unprecedented if they chose not to defend their turf on this,” she said. “I would assume they are feeling some pressure too regarding the Chipotle case filed yesterday.”

Carmen Alvarez, who worked for Chipotle in New Jersey as a manager in training, filed a lawsuit against the company on Wednesday for failing to pay her and similar employees overtime pay.

In November 2016, Alvarez claims the company changed her from a salaried employee to an hourly employee and began paying her overtime to comply with the rule before it was set to take effect on Dec. 1, 2016.

Chipotle allegedly stopped paying her overtime after the Texas court order blocked the rule, but Alvarez argues the rule was still in effect.

“Although it preliminarily enjoined the Department of Labor from implementing and enforcing the Overtime Rule, the Eastern District of Texas did not stay the effective date of the rule or otherwise prevent the rule from going into effect,” she said in her complaint filed in the federal district court of New Jersey.

Chipotle said it does not discuss pending litigation.

“As a matter of policy, we do not discuss details surrounding pending legal actions, though I’d note that all of our employment practices are compliant with applicable laws,” Chris Arnold, a company spokesman, said in an email to The Hill. 

“I would also note that a lawsuit is nothing more than allegations, and the filing of a suit is in no way proof of any wrongdoing.” 

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