Supporters of Overtime Hike Turn to States as Obama Rule Unlikely to Survive

By | January 13, 2017

With President Barack Obama’s federal overtime-pay overhaul likely to die either in court or under Republican Donald Trump, some legislators are trying to replicate it at the state level.

Democrats in Rhode Island, Connecticut, Maryland, Wisconsin and Michigan said they plan to introduce bills modeled on Obama’s reform, which would have made millions more white-collar workers eligible for overtime. More are likely to follow, said Sam Munger, a senior adviser for the State Innovation Exchange, which promotes progressive legislation.

Obama’s order, finalized by the U.S. Labor Department in May and frozen in court since November, seeks to double the pay level under which employees are entitled to time-and-a-half, even if they’re designated as managers. The president-elect criticized the rule in August, telling the website Circa it was “just one example of the many regulations that need to be addressed” to take on “over-regulation.”

“Unfortunately, these regulations undoubtedly will be repealed,” Maryland Delegate Jimmy Tarlau, who plans to introduce a bill this month, said of Obama’s rule.

Texas Injunction

The federal overtime threshold, currently $455 a week, was set to increase to $913 on Dec. 1, which the government estimated would extend protections to some 4.2 million more workers. Instead, a federal judge in Texas granted a preliminary injunction sought by plaintiffs, including the U.S. Chamber of Commerce, who argued it would raise employers’ costs and could lead to layoffs. The Labor Department is appealing, but once Trump takes over it could change course or exercise its authority to start new rule-making on the issue.

Trump’s choice for labor secretary, CKE Restaurants Inc. Chief Executive Officer Andrew Puzder, wrote in May that the new overtime rule would “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.” CKE is the parent company of fast-food chains Carl’s Jr, Hardee’s and others.

Overtime is one of several areas, like health reform and climate change, where liberal legislators around the country are now exploring ways to create miniature replacements for Obama-era reforms that could soon be unraveled.

Opportunities are limited, though, by Republican dominance at the state level: Democrats control state legislative houses and the governorship in just six states, Rhode Island and Connecticut among them. Republicans have unified control in twenty five.

‘Worth a Fight’

“It’s probably not going to happen any time soon, but it’s worth a fight,” said Michigan Senate Minority Leader Jim Ananich, a Democrat.

Kentucky state representative Chris Harris, who’s considering introducing overtime legislation, said the rule would benefit a lot of people in his district. “I hope that we as a state look at this issue and do what we can to help,” he said.

With Republicans in control of Congress, even under Obama labor advocates had turned much of their focus to state and city governments as the arena to pass workplace policies like sick-pay mandates and minimum wage hikes. With a Republican in the White House, that will be even more the case, said Wilma Liebman, who headed the National Labor Relations Board during Obama’s first term. “That’s where the action’s going to be for the next few years in terms of trying to increase protection,” she said.

Beneficial Policy

David Weil, who heads the Labor Department’s Wage and Hour Division, said the choice by companies like Wal-Mart Stores Inc. and Wendy’s Co. to keep in place compensation policies they had rolled out in order to comply with the new federal rule, even after the judge’s injunction, shows it’s a beneficial policy.

Just as states have moved to hike their minimum wage in the absence of federal action, a patchwork of new state overtime laws could develop if Obama’s solution doesn’t take effect, Weil said. That could be more complicated for businesses to deal with than a nationwide threshold increase.

“If you’re a company operating in all those different places, at a certain point you start saying, ‘This is nuts,'” he said.

Topics Legislation

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