Last May, then-Vice President Joe Biden swept into Columbus on Air Force Two, sampled a bit of Jeni’s Splendid Ice Creams, and announced a rule change that would allow some 4.2 million more Americans to receive overtime pay.
Less than one year later, that rule’s future is very much in doubt.
A federal judge in November issued a 20-page temporary injunction stopping the rule — set to be enacted last Dec. 1 — in its tracks. Then President Trump began his first day in office with an order to federal agencies to freeze all pending regulations, which provided another roadblock. The Republican-led Congress, too, has begun the year by rolling back regulations.
It’s an entirely different attitude than it was that day in Columbus, when Biden announced the administration’s plan to pay overtime to the majority of salaried workers who earn less than $47,476 a year. The increase — raising the previous cap of $23,660 — would impact millions if allowed to take effect.
The rule had some exemptions — people with certain job duties, such as executive or administrative duties, would not have qualified under the new threshold — but the Obama administration estimated that workers would receive more than $12 billion in additional pay over the next decade as a result.
‘Best day’
Sen. Sherrod Brown, in Columbus last May, said that other than the birth of his five grandchildren, “this may be the single best day I’ve had in the United States Senate.”
He’s not talking that way now. “They are taking money away from workers making $30,000 and $40,000 a year,” he said. “If you’re working 50 or 60 hours, you ought to get paid time and a half.”
On the other end of the spectrum, Rep. Steve Chabot, R-Cincinnati, chair of the House Small Business Committee, is optimistic that the rule is dead.
“I’m feeling a lot better about it now than I did during the last administration,” he said, saying the rule could ultimately drive some small businesses under as they struggle to make payroll under the new rules.
“The vast majority of employers want to treat employees well,” Chabot said. “They don’t need the federal government telling them what they ought to pay people.”
Meanwhile, some companies have moved forward despite the court order. The supermarket chain Kroger had already told its workers about the rule when the injunction stopped it. They moved forward anyway – a decision that cost $11 million and affected some 4,500 Kroger employees.
“We knew that moving forward with the plan was the right thing for us to do for our people,” said Keith Dailey, a Kroger spokesman. “We’ve moved forward and we are comfortable with where we are.”
‘Spreading employment’
Catherine Ruckelshaus, general counsel and program director for the National Employment Law Project, said overtime rules have been part of labor law since the 1930s. They were designed to protect employees from overwork and also give employers an incentive to “spread employment” by hiring more workers.
“If you do have a job that requires 60 or 70 hours week, you can hire two workers to do that job and you’re spreading employment and not overworking one worker,” she said.
Amy Hanauer, the founding executive director of the left-leaning Policy Matters Ohio, said the rule speaks to “the basic principle of how we establish a middle class in America.”
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“By letting that erode, we really relegated a lot of people to poverty wage jobs despite the fact that they’re working many, many, many hours,” she said. “I think they restored a little bit of sanity and it would be a big mistake to not have it go through.”
But others say it would be a costly job killer. Amanda Wood, director of employment policy at the National Association of Manufacturers, said the rule created uncertainty for employers by linking automatic increases to the Consumer Price Index.
“I think that uncertainty worries our employers, because they can’t plan if there’s a cloud of uncertainty on them,” she said. “It’s also hard to create more jobs when you’re not sure what the next threshold would be in a year, two years, three years going forward.”
Watching Trump
Even as those invested in the rule wait to see what the judge will say, they’re also watching the Trump administration. The administration has yet to weigh in on the rule and Trump’s pick for Labor Secretary, Andrew Puzder, withdrew his name from consideration late last week, prolonging even further the selection of a new Labor Secretary.
Ruckelshaus said if the rule is held up in courts, it will be difficult for the Trump administration to undo it.
“It won’t be that easy for the Trump administration to get rid of this, because if they want to completely withdraw the rule, it will have to be done via the notice and comment period, the way it was originally done,” she said. “Because it went through the formal process, that’s the only way to undo it.”
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