The horticulture industry was keeping an eye on the calendar — and a U.S. District Court in Texas — as December approached this year.
Back in May, the Department of Labor issued a final ruling updating the overtime requirements for salaried employees. Since the salary requirements in the overtime rules hadn’t been updated since 2004, it was due for an adjustment.
But what caught many people off guard in the business world was the ruling doubled the threshold for earning overtime from $23,660 per year to $47,476. According to Chris Schulte from CJ Lake, 4.2 million U.S. workers would have been affected by the ruling, causing an increase of $1.1 billion in worker pay each year.
The ruling, which was due to take effect on Thursday, December 1, was temporarily halted by an injunction from U.S. District Judge Amos L. Mazzant.
There were two lawsuits submitted in the East Texas district court, one by 21 states attorneys general and the other by 50 business groups and trade associations. According to Greenhouse Grower magazine, the states and businesses are disputing the salary component of the rule, arguing the Labor Department does not have the authority to require employers offer overtime to workers who earn below a certain amount.
When asked by Greenhouse Grower what the injunction means to the horticulture industry, Craig Regelbrugge, the senior vice president for industry advocacy and research at AmericanHort, said it was welcome news.
“The court’s intervention really was the only practical way to buy time without the drama of it taking affect,” Regelbrugge told Greenhouse Grower.
What does the overtime ruling injunction mean?
As I said in my last blog post on the subject, this may not mean the end of the overtime ruling, especially since the judge only pressed pause on the ruling. The Department of Labor is considering legal action against the injunction, as they believe this is causing a disservice to the millions of people who the ruling will affect.
However, with the administration change, Regelbrugge said the new leadership in the Department of Labor may abandon any legal challenges to the injunction.
The interesting thing is I think the Department of Labor would probably have a good chance of appealing the injunction — especially if the main argument was the existence of the salary component. If the salary component already existed, wouldn’t there be legal precedence for it to be allowed?
That’s not to say I agree with the Department of Labor’s original ruling. On the contrary, if the overtime ruling had been enacted as written, it would have had a devastating and chilling effect on many industries that rely on entry-level, salaried managers.
Think about it: Two of the largest industries that would have been affected by the overtime ruling would be retail and the restaurant industry. The overtime ruling would have started during the holiday season — when retail shopping and eating out are at a fevered pitch. From small businesses to big-box retailers who employ hundreds of thousands of people, they would be choosing between not being able to afford to keep their business open and having to let people go to make ends meet.
What I think may end up happening is the injunction will allow the two bills going through congress right now to help right the ship and have a more common sense approach to this ruling.
Congress working to adjust, not stop overtime ruling
In the weeks leading up to December 1, two bills looking to adjust the Department of Labor’s final ruling on overtime were introduced into Congress.
The first was H.R. 5813, introduced by Rep. Kurt Schrader (D-OR). That was followed by Sen. Lamar Alexander (R-TN) introducing S.3464, the Overtime Reform and Review Act.
Both bills would keep the same salary threshold as the original ruling. However, Schrader’s bill would phase in the threshold over three years. In Alexander’s bill, a phase-in would take place over five years and skipping 2017 all together.
Both bills would also require periodic review of the salary threshold instead of an automatic adjustment as required in the original final ruling.
These bills seem to be the most common-sense approach to the overtime ruling, and probably should have been done this way in the first place. It still gets the job done without placing undue burden on the country’s employers.
AmericanHort and several other horticulture industry organizations joined the Partnership to Protect Workplace Opportunity in writing a letter in support of Lamar’s S.3464. This means that business organizations are willing to work this out instead of just abandoning it.
Believe me, I’ve seen what an unexpected burden can do a small, family run business. Just this past month, a company owned by a family friend had an unexpected shortfall the same way a sudden change in the overtime ruling would have caused an abrupt shortfall for many small businesses. They had to choose between delaying payroll or shuttering the business.
Luckily for them, the burden was lifted and payroll was salvaged — and so was the company. And as Regelbrugge pointed out, the injunction saved companies from having to deal with the drama of it being enacted then not, then adjusted, or whatever roller coaster ride would have happened.
My money’s still on Congress working out a deal to have the overtime ruling enacted. With President-Elect Trump heading to office, the new leadership in the Department of Labor may be more willing to spread out the threshold over several years. I can even see the bills allowing for a slightly lower threshold, especially if the bill states it must be revisited every so often.
And once again, I’ll remind everyone that this is exactly what Schulte meant when he said to be prepared for anything. The overtime ruling can still turn on a dime. The DoL could successfully challenge the ruling. It could disappear. It could be adjusted. Or some unknown variable could happen.
So please remember, the best way you can stay prepared for anything is having an up-to-date human resources management system, like Sage HRMS, that will automatically keep you in compliance and lessen the burden of changes in legislation.
But this story isn’t over. I’ll be keeping an eye on this, because this will be resolved one way or another over the next few months.
Third image: Image via Bjoertvedt, Wikimedia Commons, used under Creative Commons