tiny business owners breathe easier over labor costs after overtime rule struck down

tiny business owners have had a mostly positive reaction to a judge’s selection to strike down an overtime rule that would have qualified more workers for overtime pay.

On Nov. 15, a federal judge in Texas blocked a recent rule from the Biden administration that would have expanded access to overtime pay to millions more salaried workers across the U.S. Nearly all hourly workers in the U.S. are entitled to overtime pay after 40 hours a week. But many salaried workers are exempt from that requirement — unless they earn below a sure level.

The now-scuttled rule would have marked the biggest boost to that cap in decades. As of July 1, employers were required to pay overtime to staffers who make $43,888 a year in sure executive, administrative and professional roles — and that would have risen to $58,656 a year as of Jan. 1. But now the previous threshold of $35,568 — which was set in 2019 under the Trump administration — is back in result.

The judge said the department could not prioritize employee wages over job duties when determining eligibility.

Guillaume Drew, founder of Or & Zon, a recent York business that sells sustainable home goods online with 12 staffers, said overturning the rule helps him keep labor costs and prices of goods down, particularly for upcoming employees, since none of his current staffers would have been affected. But he said it’s still significant employees are paid fairly for their period and attempt. Because the ruling was overturned, he’ll probably propose employees incentives like spa days and letting them work from home rather than overtime pay.

“Companies require to discover an equilibrium between being financially viable and caring about employees,” he said.

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

“As a tiny business, managing labor costs is critical, and the proposed transformation would have increased outgoings significantly,” he said. “The selection allows us to maintain current pay structures, ensuring budgetary stability while continuing to propose competitive wages.”

tiny business organizations also applauded the assess.

“Although blocking any boost to the threshold fails to receive into account expense boost, the Department of Labor tried to do too much too quick resulting in sticker shock for tiny businesses that are still recovering from the pandemic,” said tiny Business Majority Founder & CEO John Arensmeyer. “More measured and predictable increases are in order.”

tiny Business & Entrepreneurship Council president & CEO Karen Kerrigan added that the ruling will assist struggling tiny business owners.

“It will allow employers to align their compensation way with the needs and flexibility of the person worker and marketplace,” she said. “tiny business owners and their workers are both better served by the court’s ruling.”

Not everyone thought the shift was a excellent one for tiny businesses, however. Stephanie Penn, owner of Tee & Honey, an online t-shirt boutique based in Southfield, Michigan, said fair pay, including overtime, is excellent for morale and leads to better productivity. Two of her employees were affected by the July 1 ruling and one would’ve been affected if the higher cap went into result on Jan. 1.

“From a business perspective, having clearer guidelines around overtime pay also helps to avoid potential disputes or misunderstandings about compensation,” she said. “By striking down the rule, it places a heavier burden on businesses like mine, which strive to do correct by their employees, while also leaving room for inequities that could damage both morale and retention.”