The recent fight over the Fiduciary Rule has me thinking back to the last major change from the Department of Labor, the Overtime Rule. If you remember, the DOL issued a new rule for overtime last year under direction from President Obama. It raised the salary and compensation levels for executive, administrative, and professional workers’ exemptions and would have made millions of workers eligible for overtime that were not previously.
However, the rule was halted by a court in Texas days before it was set to go into effect. Unfortunately, many businesses had already made significant changes by the time the rule was frozen. Many negotiated millions of dollars in raises, meanwhile the underlying rule evaporated and left them with a lose-lose scenario.
Now, the Department of Labor is defending its Fiduciary Rule in a similar fashion. The Fiduciary Rule expanded the scope of the concept of a fiduciary, or an individual who has a legal duty to you to act in the best interests of their client. That sounds good in theory, but the expansion now encapsulates any professional providing even a recommendation and could include individuals that are not compensated for their advice. These individuals were previously held to a stringent but lower standard.
Nevertheless, the rule was set to be enacted on April 10, 2017, when a last minute delay was filed in the Federal Register with a new implementation date of June 9, 2017. There is widespread belief that the rule could be modified before then.
However, to change a Final Rule the Department of Labor would need to follow administrative law requirements with notice and comment, and it’s unclear whether they could pass all the administrative hoops before June 9.
So, employers that wrote up new job descriptions and renegotiated job duties are once again waiting, while the feds decide what they’d like to do, and herein lays the rub. While greater regulatory burden is certainly not desirable, the current climate of instability is not ideal either and this back and forth is leaving many businesses holding the bag.
The Department of Labor’s Overtime Rule actually went into effect in practice for huge swaths of the economy because very few companies were willing to revoke raises they were forced to offer to employees. Now they’re waiting to see if the feds will enforce this new Fiduciary Rule as well, even if it’s effectively moot in the end.
Finally, HB198 passed through committee in Springfield and is now headed to the floor of the House. With House Amendment 1, it introduces a minimum wage that would increase statewide to a maximum of $15/hour by calendar year 2022. It does not look like the bill has the necessary votes to overcome a likely veto, but we will continue to monitor its trajectory closely.