Overturning Overtime

Illustration by Jason Stout

Just days after the Chronicle ran a story about the efforts local employers were taking to comply with a new federal overtime rule that would have boosted earnings potential for millions of workers ("Welcome to the Working Week-and-a-Half," Nov. 18), U.S. Federal Judge Amos Mazzant issued an injunction preventing the new rule from taking effect. The injunction, issued after Texas Attorney General Ken Paxton and attorneys general from 21 other states filed a lawsuit against the rule, decrees that the Obama administration exceeded its authority by raising the minimum salary a worker must earn to be exempt from mandatory overtime wages – from $23,660 to $47,476. Existing law, Mazzant determined, allows overtime exemption to be determined by job duties only – not salary.

By issuing the injunction, the Sherman, Texas, judge declined to fully kill the rule, but rather, block it after deciding it was likely that Paxton and company would eventually succeed at trial. For the time being, however, employers who believed they were going to have to either raise workers' salaries, or start paying overtime to them, are now in line to keep a larger share of their profits. Susan Burton, an employment attorney who works with small businesses on labor laws, described the reaction of those small-business employers as "very excited. They're very happy. One of them said: 'The best day I've had all week.'" At a press conference held Dec. 1, the day the rule was set to take effect, state AFL-CIO director John Patrick derided Paxton's decision to file for injunction as "morally wrong." Estimates suggested the rule would have affected 370,000 Texas workers.

Employers now best positioned in the wake of the injunction are those who declined to do anything about the looming regulations when they were still pending. The ones who didn't put any plan in place for the anticipated rule now won't face any penalties for their inactivity. Diligent employers that acted on the implications of the new rule by boosting worker salaries or by planning to adjust schedules or pay overtime, find themselves in an awkward position, however – now that it turns out they didn't need to raise salaries or make salaried employees eligible for overtime. "It will be very hard to reverse that," Burton said of the predicament companies may find themselves in moving forward with salaried staff. "Legally they can do it; I think it will be hard to do it from an employee morale standpoint."

Indeed, Andy Miller, executive director of local nonprofit Any Baby Can, told the Chronicle he has halted plans to switch 25 employees from salary to hourly positions, but is not going to undo the salary increases he already approved to bump two workers above the threshold. "We're following through with those two because we promised them [raises]," he said. Natalie Earhart, general manager at the Galaxy Cafe on West Lynn, said similarly that her company has no plans to change what it had put in place in anticipation of the new rule. She said Intergalactic Productions, the Austin company that owns Galaxy and four other local restaurants, had already switched much of its managerial staff from salary to hourly wages (at the same pay) and told them that they would be paid time-and-a-half wages for every hour they work beyond 40 in a given week.

Burton speculated that the rule now faces steep odds of going into effect. If the Obama administration quickly pursues the case to the next stage of the legal process, the attorney said, it will have to do so in the 5th Circuit Court of Appeals, a court Burton described as "typically … known to be pro-employer, more conservative." Making matters more difficult for pro-labor advocates is that the party of 22 plaintiffs fighting the rule – the GOP – will soon control the White House and both chambers of Congress. In his only comment on the overtime laws, issued several months ago, President-elect Donald Trump said that he would like to see an exemption to the new rule for small businesses. House Speaker Paul Ryan has called the increased salary threshold a "disaster."

The only hope for advocates may be that the PE has, to put it mildly, readily shown himself to be ideologically flexible. As noted in Michael King's "Point Austin" column last week, Trump has claimed both that "wages are too high" and that the federal minimum wage should be raised. He also repeatedly promised during his campaign that he would protect the entitlement programs that the conservative establishment loathes. What Trump has actually done since the election should provide very little hope for workers. The assortment of billionaires and corporate executives he has named to key economic positions are firmly in the Koch Brothers camp of the GOP – the wing devoted to crushing unions, gutting worker protections, and dismantling social services.