On December 8, 2016, President-elect Donald Trump announced his nomination for Secretary of Labor. Andrew Puzder, current Chief Executive Officer of CKE Restaurants Holdings, Inc., a company that operates fast food restaurants Hardee's and Carl's Jr., must now go through the Senate nomination process to become the next head of the U.S. Department of Labor (DOL). What does President-elect Trump's nomination of Mr. Puzder mean for the fate of the presently-enjoined, would-be new FLSA regulation altering the salary threshold for the "white collar" exemptions (the New Regulation)?
On November 22, 2016, a federal district court judge entered a nationwide injunction blocking, at least temporarily, the implementation of the New Regulation. On December 8, the U.S. Court of Appeals for the Fifth Circuit granted the DOL's request for an expedited briefing schedule in its appeal from the injunction. Even under the expedited schedule, however, the last brief will not be filed until January 31, 2017, with a court hearing to follow. As a result, any decision on the appeal almost certainly will not occur until after President-elect Trump's January 20, 2017 inauguration. Until a decision is reached by the appeals court, the New Regulation will remain on hold, and employers have no obligation to abide by the updated salary thresholds set forth in the New Regulation.
While it is, of course, impossible to predict the future, Mr. Puzder is an outspoken critic of the New Regulation. This could suggest that, under the new administration, the DOL might decline to pursue the pending appeal of the injunction and possibly even drop its defense of the lawsuit and of the New Regulation itself. In such an event, it is possible that the New Regulation might never take effect. Again, however, at present this is only speculation, and again, for his part, Mr. Puzder must first be confirmed by the Senate.
Even if the DOL continues to pursue its appeal, success is far from certain, particularly given that the forum in which the appeal is pending – the Fifth Circuit – is generally viewed as conservative and less deferential in its approach. This is to say nothing of the potential opposition to the New Regulation among leaders of the Republican majorities in the House and Senate. This new leadership may also assess issues including proposed minimum wage increases, the status of joint employer liability, paid sick leave, and parental leave.
In sum, the current hold on the New Regulation is likely to remain in place beyond Inauguration Day, at which point the New Regulation's fate will be in the hands of its opponents. Still, employers should not assume that the New Regulations will not go into effect and should continue to assess the best strategies for navigating the current murky waters, considering state law requirements that may present shoals on which to founder and personnel relations that could affect employee morale. If you have any questions about the status of the New Regulation, or how to prepare for the potential outcome of the litigation and the changing administration, please contact the Labor and Employment attorneys at Venable LLP.