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Alex Acosta, President Donald Trump's nominee to be Secretary of Labor, testifies during his confirmation hearing before the Senate Health, Education, Labor, and Pensions Committee on Capitol Hill in Washington, D.C., U.S. March 22, 2017. REUTERS/Aaron P. Bernstein

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By Amanda Becker

WASHINGTON (Reuters) - R. Alexander Acosta, tapped by President Donald Trump to head the U.S. Labor Department, on Wednesday told a Senate panel he had reservations about an overtime rule put in place by the Obama administration, saying its effect on the economy needed to be considered.

At his confirmation hearing, Acosta conceded it was unfortunate the existing rules had not been updated in more than a decade because of cost-of-living increases.

The Obama administration rule would extend mandatory overtime pay to more than 4 million salaried workers. A federal judge blocked the rule in November and the Trump administration must decide whether to pursue or withdraw the government's appeal.

Acosta said he had "serious questions as to whether the secretary of labor had the power to enact this in the first place."

The remark suggests Acosta, if confirmed, may not defend the rule against legal challenges.

However, Acosta told senators he was sensitive to the fact that overtime rules have not been updated in more than a decade.

"I think it's unfortunate that rules involving dollar values can sometimes go more than a decade, sometimes 15 years, without updating, because life does become more expensive," he said.

"We now see an update that is a very large revision and something that needs to be considered is the impact on the economy."

The overtime rule, issued by the Labor Department last year, more than doubled the salary ceiling under which employees would be eligible for overtime pay, from $23,660 to $47,476 a year.

Acosta, a former member of the National Labor Relations Board and dean of the Florida International University College of Law in Miami, was nominated to be labor secretary in February, one day after Trump's original choice withdrew from consideration.

Acosta has had a decades-long career in the public sector, serving on the National Labor Relations Board under former Republican President George W. Bush, who also appointed him to be assistant attorney general in the Justice Department's Civil Rights Division.

He was then appointed U.S. attorney for the Southern District of Florida, where he went after high-profile defendants such as Washington lobbyist Jack Abramoff and UBS, resulting in the Swiss bank paying more than $750 million in fines for a tax-avoidance scheme.

Acosta had served as a law clerk to Samuel Alito from 1994 to 1995, when the conservative Supreme Court justice was a judge at the 3rd U.S. Circuit Court of Appeals.

Because Acosta already has been through multiple Senate vettings for previous appointments, it is unlikely there will be surprises in his background that could derail his nomination.

Nevertheless, Democrats on the U.S. Senate Committee on Health, Education, Labor and Pensions questioned him about Trump's proposal to slash the Labor Department's budget by 21 percent.

"My personal perspective is they should not be across the board and at the same time it should not focus on particular programs," Acosta said of the proposed cuts.

In a 23-page letter to Acosta dated Tuesday, Senator Elizabeth Warren of Massachusetts, one of the most high-profile Democrats on the panel, laid out the concerns she wanted the nominee to address, beginning with the agency's budget.

"These draconian cuts will hobble your ability to run core parts of the agency, including the divisions that investigate and enforce the federal health and safety standards that keep workers safe on the job and the federal wage and hour laws that ensure that workers are paid fairly," Warren wrote.

Democrats also were likely to ask about the Trump administration's proposed delay of the fiduciary rule for retirement investment advisers that was adopted under Democratic President Barack Obama and set to take effect next month.

If Acosta clears the panel he will come up for a confirmation vote before the full U.S. Senate.

(Additional reporting by Robert Iafolla; Editing by Leslie Adler and Bill Trott)

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