White House Halts New Regulations: Overtime Rule Impact

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The new White House administration wasted no time sending messages of change. Most notably President Trump signed an executive order directed at minimizing the economic burden of the Affordable Care Act (ACA). That alone bears further observation and analysis. But for the purposes of this article we wish to talk about the memo from the White House Chief of Staff freezing of new regulations.

How will this freeze impact the Federal Overtime Rule that was initiated by the previous administration?

White House Chief of Staff Reince Priebus, sent a memo to all executive departments and agencies to freeze new or pending regulations subject to the administration’s review. What this does is halt any policies that have not yet been finalized. Federal regulations go through several steps before becoming finalized. See memo here: White House Memo.

The memo asks agencies not to send any regulations to the Federal Register until reviewed. For those that have been sent but not published, the White House ordered those regulations to be withdrawn. Further, there are regulations that have been published but not reached an effective date are to be delayed for 60 days for review. The grid below provide an easy reference.

The federal overtime rule intending to expand the number of workers who are eligible for overtime was set to go into effect December 2016. However, the regulation became ensnarled in a judicial action when a federal judge put the regulation on hold. Because the rule has not yet taken effect, the freeze initiated by the new administration will apply.

While the overtime rule hangs in the balance let’s review the rule’s economic impact.

The Department of Labor’s economic impact study states that the overtime expansion will result in an increase in pay to employees of $1.2 billion per year. However, this comes at a serious cost to employers. The same economic impact study says the price tag to employers is $1.5 billion per year in increased payroll costs. See DOL's Economic Study here: Economic Impact OT

While the Department of Labor also states this change will not disrupt the economy, those in the trenches have been analyzing ways to reduce employee hours, reduce FTEs and pass costs on to consumers to help compensate for yet another costly regulation.

For those employers who have not implemented the overtime regulation is most likely breathing a sigh of relief for putting this one on the "wait and see" list. For those who have implemented the overtime regulation may have to adjust the pay program in the future. Whatever the case, employers will be best served to watch what's happening and be ready to roll with it.

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Tresha Moreland

Tresha Moreland is a 30-year organizational effectiveness and strategic workforce planning expert. She partners with business leaders to develop workplace strategies that achieve best-in-class results. She has held key organizational leadership roles in multiple industries such as manufacturing, distribution, retail, hospitality, and healthcare. Tresha is the founder and principal consultant of HR C-Suite, LLC (www.hrcsuite.com). HR C-Suite is a results-based HR strategy resource dedicated to connecting HR with business results. She has received a master’s degree in human resource management (MS) and a master’s degree in business administration (MBA). She has also earned a Senior Professional in Human Resources (SPHR), Six Sigma Black Belt Professional (SSBBP) Certification. She is also recognized as a Fellow with the American College Healthcare Executives with a FACHE designation.