Back in May, President Obama and the Department of Labor announced a major law change that would have allowed low-salaried workers finally earn overtime pay for overtime work across the country and U.S. District Court Judge Amos Mazzant of East Texas just fucked it all up.
For those not in the know, salaried workers, as oppose to hourly workers, do not earn OT pay if they work passed 40 hours. In order to classify as what’s called an “Exempt Employee” according to the Department of Labor, your position must meet the following standards:
Executive
• The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less
than $455 per week;
• The employee’s primary duty must be managing the enterprise, or managing a customarily recognized
department or subdivision of the enterprise;
• The employee must customarily and regularly direct the work of at least two or more other full-time
employees or their equivalent; and
• The employee must have the authority to hire or fire other employees, or the employee’s suggestions
and recommendations as to the hiring, firing, advancement, promotion or any other change of status of
other employees must be given particular weight
Administrative
• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not
less than $455 per week;
• The employee’s primary duty must be the performance of office or non-manual work directly related to
the management or general business operations of the employer or the employer’s customers; and
• The employee’s primary duty includes the exercise of discretion and independent judgment with respect
to matters of significance.
Professional
• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not
less than $455 per week;
• The employee’s primary duty must be the performance of work requiring advanced knowledge, defined
as work which is predominantly intellectual in character and which includes work requiring the
consistent exercise of discretion and judgment;
• The advanced knowledge must be in a field of science or learning; and
• The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual
instruction.
Typically, the salaried workforce includes business professionals such as attorneys, physicians, and other executives who are generally expected to work over 40 hours a week. However, there’s another class of salaried employees who have managerial or executive duties, but don’t have salaries nearly as high as attorneys or physicians. We’re talking your office managers, department heads, teachers, restaurant managers who typically work 50 to 60 hours a week and make as little as $23,660, which is the current minimum salary you can pay someone as an overtime-exempt employee.
So let’s do the math:
If Person X is a manager at a privately owned restaurant salaried at $455/week and works 40 hours that week, their hourly rate comes out to a respectable $11.37/hr.
Now, let’s revert back to the real world and try that example again:
If Person X is a manager at a privately owned restaurant salaried at $455/week and works 55 hours that week, their hourly rate comes out to a $8.27/hr.
The new law would have raised the minimum salary for exempt workers from the 1950’s respectable standard of $23,660 ($455/week) to a reasonable $47,476 ($913/week).
Now all of that is probably out the window with Judge Mazzant’s granting of the emergency injunction (State of Nevada ET AL v. United States Department of Labor ET AL No: 4:16-CV-00731) that has prevented the new law from taking effect on December 1st.
On the other side of the argument, small, struggling businesses who can barely afford payroll as it is just got a stay of execution from raising salaries, paying more OT hours, cutting productive hours, and/or paying significantly higher payroll taxes. The RGV, having some of the poorest counties in the state, is in a particularly peculiar position. The area could desperately use an injection of individual income, however, at what point would the risk of raising the minimum salary to a rate that’s well above the cost of living for the area be too much of a burden on smaller local businesses already struggling against big-box/chain pricing and marketing?
The ramifications for this eventual trial (because there’s no way this DOESN’T go to trial) could have significant impacts on our economy and set a monumental precedent for labor if this reaches the SCOTUS bench. The last time this court heard a major labor case, they ended in a 4-4 tie with Scalia’s spot left open. Once Trump and his GOP congress appoint a new right-wing Justice, it might not take a genius to see where this current court might stand on this issue.
