While much of the state of Texas was busy recovering from Harvey, a federal judge in Texas struck down an Obama-era Department of Labor rule that would have required businesses, including restaurants, to pay overtime to employees making less than $47,476 a year and working more than 40 hours a week. The overtime threshold has been limited to anyone making less than $23,660 annually. Above that — no overtime pay for restaurant employees.
When the Overtime Law was introduced at the end of 2016, it was in part a means of raising wages via Executive Order, since Congress wouldn't approve of a minimum wage increase from $7.25 to $10.10 an hour. It would have allowed an estimated four million more workers to receive overtime, including in the hospitality industry, in which cooks, bartenders and more workers are often putting in extremely long days but getting the shaft because of something called a "duties test" that allows bosses to make certain employees exempt from overtime.
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
On Thursday of last week, Judge Amos Mazzant, an Obama appointee in the United States District Court, Eastern District of Texas, Sherman Division, who had already filed an injunction against the Overtime Law back in December, shot down the regulations, citing that he believes that the Department of Labor wrongly focused the law on salary rather than job description or those pesky "duties." According to Reuters, opponents of the law believe that states would have to spend millions of dollars on overtime pay and that the law could lead to many job losses. Certainly, there is no doubt that restaurant owners would be taking the brunt of the regulations, having to raise salaries to avoid paying overtime à la New York restaurateur Danny Meyer, or shelling out for those who put in the work.
In early August, The Atlantic reported that jobs in the hospitality sector made up 10 percent of this year’s job growth overall, in a piece titled Restaurants Are the New Factories:
Restaurant jobs are on fire in 2017, growing faster than health care, construction, or manufacturing. The Bureau of Labor Statistics calls this subsector “food services and drinking places,” and the jobs are mostly at sit-down restaurants, which make up 50 percent of the category. Fast-food joints are the next-largest employer in the category, with 37 percent.
The Trump administration is expected to create its own bill after taking public comments, but under Obama the U.S. Department of Labor had already spent two years working on the rule and reviewed nearly 300,000 public comments. Before that, federal overtime pay regulations hadn't changed since 2004.