Some small business owners are getting relief after the overtime law is blocked

Small business owners reacted positively to a judge’s decision to strike down an overtime law that would have made more workers eligible for overtime pay.

On November 15, a federal judge in Texas blocked a new law from the Biden administration that would have expanded access to overtime pay to millions more salaried workers across the U.S. Almost all hourly workers in the U.S. are entitled to overtime pay after 40 hours. a week. But most salaried workers are exempt from that requirement – unless they earn below a certain level.

The legislation now pending would mark the largest increase in that cap in decades. Starting July 1, employers were required to pay overtime to workers making $43,888 a year in certain managerial, administrative and professional roles — and that would rise to $58,656 a year starting Jan. 1. But now the previous limit of $35,568 — which was suspended in 2019 under the Trump administration — is back in effect.

The judge said the department cannot prioritize workers’ salaries over jobs when deciding whether they are eligible.

Guillaume Drew, founder of Or & Zon, a New York-based online sustainable home goods company with 12 employees, said overturning the law helps him keep labor costs and commodity prices low, especially for future workers, because none of his employees will be affected. . But he said it is still important that workers are paid appropriately on time and for their efforts. Because this decision is overturned, you will likely offer employees benefits such as spa days and allow them to work from home rather than pay overtime.

“Companies must find a balance between being financially strong and taking care of employees,” he said.

Sheldon Sutherland, owner of Epoxy Werx, a San Diego-based business with 12 employees specializing in epoxy flooring, said the decision is good for his company.

“As a small business, managing labor costs is important, and the proposed change will increase costs significantly,” he said. “The decision allows us to maintain current salary structures, ensuring financial stability while continuing to offer competitive salaries.”

Small business organizations have also applauded the move.

“While blocking any increase in the limit fails to account for inflation, the Department of Labor tried to act too quickly which resulted in sticker shock for small businesses still recovering from the pandemic,” said Founder and CEO of Small Business John. Arensmeyer. “A moderate and unpredictable increase is fine.”

Small Business and Entrepreneur Council President and CEO Karen Kerrigan added that the decision will help struggling small businesses.

“It will allow employers to adapt their compensation approach to the needs and flexibility of each employee and the market environment,” he said. “Small businesses and their employees are both better served by the court’s decision.”

Not everyone thought the move was good for small businesses, however. Stephanie Penn, owner of Tee & Honey, an online T-shirt store based in Southfield, Michigan, said fair pay, including overtime, is good for morale and leads to better productivity. Two of his employees were affected by the July 1 decision and one would have been affected if the higher cap went into effect on Jan. 1.

“From a business perspective, having clear guidelines on overtime pay also helps avoid potential disputes or misunderstandings about compensation,” she said. “By breaking this law, it places a heavy burden on businesses like mine, which strive to do right by their employees, while leaving room for inequality that can damage both morale and retention.”

-Mae Anderson, Associated Press business writer