Article

Texas groups join NRF to sue Labor Department over new overtime rule

A group of Texas chambers of commerce has joined the NRF to file suit on behalf of the "millions of employers and employees" that the groups say the new rules will negatively affect.

September 21, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

Although a recent poll of QSR industry executives by this site (see list below) indicated restaurateurs anticipate relatively few problems with the onset of the federal overtime rules on Dec. 1, a group of Texas chambers of commerce has joined a number of national retail organizations, to file suit in U.S. District Court for the Eastern District of Texas on behalf of the "millions of employers and employees" that the groups say the new rules will negatively affect.

"The Labor Department’s extreme and reckless changes to the overtime rules will hobble the career paths of millions of Americans trying to climb the professional ladder," said National Retail Federation Senior Vice President for Government Relations David French. "Retailers are already struggling to implement this new government mandate before the swiftly approaching deadline, and the automatic update included in the rule would make them do this same dance every three years for as long as they are able to remain in business. This is a massive government overreach of executive authority, and the courts need to put a stop to it."

TheNRF said that its research indicated that the new rules will "force employers" to cut hours or base pay to make up for added cost of having to pay people for the overtime hours they work. The suit said as a result, the employees that the rule is designed to support will actually end up without any more take-home pay, while employers will be spending far more in administrative costs to comply with the law. The NRF said its research also shows that "the majority of retail managers and assistant managers … oppose the plan."

QSRweb.com’s recent poll of quick-service industry executives tells a different story. It did not indicate massive layoffs or hour reductions for workers in the restaurant industry as a result of the new overtime rules. The list below, for instance, shows the results of one of the questions surrounding this issue in the QSRweb.com State of the Industry poll taken earlier this month:

When new overtime rules go into effect in December, what changes will you make?(Select all the apply)
1.    Put all or most employees on hourly wage (43.3 percent)
2.    Increase some salaried workers to minimum (26 percent)
3.    Increase all salaried workers to minimum (19.7 percent)
4.    No planned changes or limit hours to avoid overtime (15.7 percent)
5.    Cut health or other benefits (9.4 percent)
6.    Lay off employees and convert others to salaried (6.3 percent) 

The entire state of the industry report, including graphic breakdowns of responses of industry responses to each question in an array of QSR management subject areas will be available next month.

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.