Welcome to Thomas Perez’s new on-the-clock white-collar workplace, in which employers will be under the legal gun to monitor lunch breaks, revoke permission to telecommute, disallow “comp time” setups allowing a day with the kids, and forbid email or company-cellphone use after business hours. I’ve got a link-heavy new post at Cato surveying the damage after the Department of Labor’s final adoption of its new overtime rules, much criticized already in this space. The press is already reporting on the business consequences.
- Los Angeles hotel workers catching on to real intent of city ordinance carving out sub-minimum wage at unionized employers [Scott Shackford, Reason] “Why Sports Authority is throwing in the towel and closing all of its stores” [Kevin Smith, San Gabriel Valley Tribune/Pasadena Star-News]
- “France might pass a law that makes it illegal to send after-hours work emails” [Washington Post]
- Boiled at slightly lower temperature: DoL considering knocking down salary threshold a bit, $47,000 rather than $50,440, for its awful upcoming overtime mandate [Jon Hyman; video from Partnership to Protect Workplace Opportunity, group critical of regs; earlier here, etc.]
- “Eleventh Circuit Reins in NLRB’s Mischaracterization of Independent Contractors as ‘Employees'” [John Park, Washington Legal Foundation]
- “Relax Everyone: NELP’s New Report Says The Minimum Wage Doesn’t Cost Jobs” [Tim Worstall] “The Economic Denialism of a $15 Minimum Wage” [John McGinnis; Chris Edwards/Cato] David Henderson scrutinizes work by left-wing Berkeley economist Michael Reich backing $15 minimum [EconLog]
- Idea of abolishing the tip system, pushed by some labor activists and eyed as a fallback by businesses tied up in wage law knots, meets with huge resistance from restaurant staff in U.S. [NPR]
- “Hillary Clinton Just Turned the Democratic Party Into the Party of the $15 an Hour Minimum Wage” [Peter Suderman]
- Finally, Republicans introduce bill to stop Obama’s overtime edict [SHRM, Connor Wolf, Veronique de Rugy] “Congress realizes new overtime rules stink” at least as applied to themselves [Suzanne Lucas, Evil HR Lady, earlier] Knowing whether you’re in FLSA compliance can be tricky enough to fool HR specialists [Eric Meyer]
- “German army forced to lay down weapons due to ‘overtime limits'” [Telegraph, U.K.]
- “Minimum Wage Hike Kills Popular Upstate NY Eatery” [Legal Insurrection] “Please don’t be the reason the future of our farm ends here and now” [WENY, upstate New York]
- “How raising the minimum wage hurts disabled workers” [Naomi Schaefer Riley, Philanthropy Daily] Maryland moves to end exception that allowed workshop programs for the disabled to pay subminimum wages, and if clients sit at home as a result, at least they’ll have their rights on [Capital News Service]
- Proposed D.C. ordinance restricting “predictive scheduling” of employee hours would snarl retail and restaurant operations [E. Faye Williams, Huff Post]
- “Economically, minimum wages may not make sense,” said Calif. Gov. Jerry Brown, and then proceeded to sign the bill [Scott Shackford, Reason] “UC Berkeley Touts $15 Minimum Wage Law, Then Fires Hundreds Of Workers After It Passes” [Investors Business Daily]
At Workforce.com, attorney/blogger Jon Hyman, often linked in this space, follows up on the Mercatus Center report on the high cost of the Obama administration edict ordering overtime for mid-level salaried workers. He writes:
I’d like to focus on one such unintended consequence — lack of workplace flexibility.
From the report:
If employers are forced to record and measure employee hours, they will shift away from allowing employees to telecommute because the cost of monitoring hours for telecommuting is significantly higher, although not impossible given new technologies. The proposed regulation would create a scenario whereby telecommuters have an incentive to work overtime because they would get paid 1.5 times the regular rate and, knowing this, employers have an incentive to make sure employees do not work overtime. A mechanism will be needed by which the employer is able to track the work hours of employees such that the employer knows when an employee is working overtime. Showing up at work and clocking in is the mechanism by which employers normally track employees’ hours. With telecommuting, it is difficult for an employer to track the number of hours worked. As a result, employers may require telecommuters to start physically showing up for work so that they to track and monitor the number of hours these employees work.
Employees like being exempt. They like the flexibility of not having to track their hours. They like the flexibility that comes with a salary that compensates an employee for all hours worked in week, whether it’s 30 hours this week, or 65 hours next week, or 47 hours the week after. The new regulations will strip 5 million employees of this flexibility and convert them to time trackers. Does this change benefit employees? I bet if you polled the 5 million, you’d find that most would prefer to keep their flexibility instead of trading it in for whatever minimal additional compensation (if any) they expect to recover from a switch to non-exempt.
Well, isn’t this a shame:
Brad Fitch, president and CEO of the Congressional Management Foundation, told Bloomberg BNA Feb. 16 that House “Democratic chiefs of staff are freaking out” about finding room in their budget for overtime wages.
It’s not clear whether the Obama administration’s forthcoming edict on overtime will apply to legislative staffers, but House Democratic leadership decided it would be prudent for their members to at least gesture toward the spirit of the controversial rule by preparing for compliance. [BNA Daily Labor Report] Now “the rule is creating administrative headaches” and more:
“We don’t have a set-hour kind of situation here; some kids work 12, 14, 16 hours a day, weekends, and I feel terrible that I cannot afford to give raises to the staff,” Rep. Alcee Hastings (D-Fla.) told Bloomberg BNA Feb. 11.
With $320,000 slashed from members’ representational allowances (MRAs) over the past four years, “I don’t see how we could pay overtime” for the “17 or 18 people that each of us is allowed to have—that’s problematic for me,” added Hastings, a senior member of the House Rules Committee.
Some members fear that an overtime mandate will result in having to send staffers home at 5 p.m., leaving phones unanswered and impairing constituent service. “Most members are of the sentiment that it’s impractical to be paying overtime,” said former Virginia Democratic Rep. Jim Moran, now a lobbyist, who suggests that members choose to close one of their district offices or reduce constituent correspondence to adjust to a smaller staff number.
In the bonbon box of schadenfreude, this is one of the ones I would save to eat last.
From Donald Boudreaux and Liya Palagashvili for Mercatus on a topic we’ve covered a lot. Abstract:
Under the Fair Labor Standards Act, employers must pay workers who work more than 40 hours in a week time-and-a-half for every hour worked over 40. Numerous exemptions to this requirement exist, including for salaried workers who have “executive, administrative, or professional” (EAP) duties and have a annual base salary of more than $23,660. The Department of Labor recently proposed removing the exemption for EAP workers earning an annual base salary of between $23,660 and $50,400, which would extend mandatory overtime pay to an additional 5 million workers. While the Department of Labor claims that this change will encourage additional hiring, improve the well-being of employees, and lead to higher paychecks, economic theory and empirical evidence suggest otherwise.
A new study for the Mercatus Center at George Mason University provides a thorough analysis of the Department of Labor’s proposed overtime rules, finding that the rules will fail to achieve their objectives and will reduce the diversity of labor contracts used across different industries in the United States. Research indicates that the rules will increase compliance costs for firms, and that employers will respond to the new requirements in unintended ways. In particular, employers will be forced to move some employees from salaries to hourly pay or find other ways to clock their work.
The damage from one of President Obama’s worst unilateral edicts, overtime for junior managers and other workers with middling salaries, is going to radiate through every sector of the productive economy. That includes academia: “The University of California school system, for instance, faces a $39 million-a-year tab for raises to avoid paying overtime to thousands of postdoctoral scholars, librarians and specialists. The University of Iowa says it would limit work hours of staff. And a state university in Missouri could cut some employee benefits.” [WSJ]
And so it goes: three former line cooks will get $3,540, their lawyer $15,700 as chef Bryan Voltaggio and business partner Hilda Staples (whose Volt and Family Meal restaurants are among my favorites) settle overtime claims [Frederick News-Post]
Last month we told the story of a Texas business that managed to clobber the U.S. Department of Labor in court over its challenge to the company’s use of independent contractors. The Fifth Circuit granted the company a substantial award in legal fees to punish the department for its bad faith in litigation.
Now, Coyote relates a personal encounter in which he runs into a man at a Houston steakhouse who turned out to be the owner of that company, Gate Guard:
I refused to believe him until he showed me a picture of him with the check. He had had it blown up into one of those huge golf tournament checks. I told him he was my hero and tried to buy him drinks the rest of the night, but when I got up to leave, I found he had actually paid my tab. I drank that evening on the Department of Labor’s dime, I guess.
- Immigration-related rules on the one hand, national-origin discrimination rules on the other: “Employers could get sued for following the law” [Sean Higgins, Washington Examiner]
- Should anyone doubt labor relations as an academic field tilts way left, here are numbers [Mitchell Langbert, Econ Journal Watch]
- Connecticut high court opens door to letting kids of dismissed workers sue employers for lost consortium, on top of suits filed by the parents themselves [Daniel Schwartz]
- Obama scheme to yank millions of workers off salaried status is a real economic menace [Trey Kovacs, CEI, earlier]
- Panel discussion marks 80th anniversary of National Labor Relations Act with lawprofs Richard Epstein and John Raudabaugh, Bill Samuel (AFL-CIO) and Mark Schneider (Machinists), moderated by Hon. Joan Larsen of Michigan Supreme Court [Federalist Society video, National Lawyers Conference]
- “Employment-related class action settlements hit high in 2015” [12th annual Seyfarth Shaw Workplace Class Action Litigation Report via Staffing Industry Analysts] EEOC Employee Charge trends, annual report [Hiscox, and note map on p. 4 of employee lawsuit hotspots including Illinois, California, Nevada, and New Mexico]