A preliminary injunction issued yesterday in a lawsuit filed by the National Retail Federation (NRF), attorney generals from 21 states and 50 business groups back in September blocked impending changes to federal overtime pay rules – and blocking that rule may benefit trucking as well.
The contentious changes made by the U.S. Department of Labor (DOL) back in May to overtime pay rules mainly affected so-called “white collar” workers – some 3.9 million of them, according to the Congressional Budget Office (CBO), though others say the number is closer to 4.2 million.
[Interestingly, while the CBO said cancelling the overtime rules would lower potential worker pay, it would actually increase real family income. Check their report to unpack that unusual twist.]
Jane Clarke, vice president of member services for NationaLease, smartly dissected the impact of the DOL’s overtime rule change on trucking – originally due to take effect on Dec. 1– in this story, but here’s a quick summation:
- The DOL rule change raised the “pay threshold” for exempt employees; ones not eligible to receive overtime pay for hours worked over 40. Non-exempt employees, by contrast, must be paid time and a half for any hours they work over 40 in a week.
- That “dollar threshold change” of the wage for an exempt employee meant more white-collar workers would have been eligible for overtime pay. Right now it’s $23,600, but after Dec. 1 it would have jumped to $47,476. On a weekly basis, that threshold went from $455 to $913.
Clarke argued that the “mostly likely place” where fleets would have seen this rule play out is with administrative and professional workers – dispatchers, clerks, and the like
The lawsuit headed up by the NRF argued that both the $47,476 annual minimum salary for workers to be exempt from overtime set by the new overtime rules – more than double the current level – and the automatic increase in that amount every three years demanded by the DOL’s rule “exceeded the Department’s statutory authority under the Fair Labor Standards Act and are in violation of the intent of Congress.”
In terms of monetary impact on businesses larger and small, the U.S. Chamber of Commerce estimated that the overtime rule change would have added $1 billion in costs. The 21 states involved in the lawsuit said the rule would’ve added $115 million in government costs as well.
Apparently, U.S. District Judge Amos Mazzant III in Sherman, Texas, agreed and so blocked the rule.
The overtime rule came up in a conversation I had with Chris Spear, president and CEO of the American Trucking Associations (ATA), earlier this week and he told me it is but one example of “where regulations don’t work, affecting our industry negatively.”
In Spear’s view – and it’s spot on, from where I sit – since trucking hauls over 70% of U.S. domestic freight, “there are very few issues out there that we are not a part of, whether directly or indirectly.”
David French, NRF’s senior vice president for government relations, was far blunter in his take on the impact from those overtime rule changes.
“The rules are just plain bad public policy, and we are pleased that the judge is allowing time for the case to go forward before they can go into effect,” he said in a statement. “We hope the judge ultimately finds in our favor, and in the meantime this timeout gives Congress a chance to take another look at the impact of these rules.”
We’ll see what comes of that effort in the coming months.