Alabama officials react after judge blocks Barack Obama overtime rule
A federal judge in Texas issued a nationwide temporary injunction on Tuesday against an Barack Obama administration rule to extend mandatory overtime pay to more than 4.2 million salaried workers Scheduled to take effect on Dec. 1., the regulation would raise the salary limit below which workers automatically qualified for overtime pay to $47,476 from $23,660. If implemented, the new rule would have more than doubled the minimum salary threshold to pay overtime for public and private workers, without Congressional authorization — marking the first significant change in four decades. The judge, Amos L. Mazzant III of the Eastern District of Texas, agreed with 21 states, including Alabama, that the rule is unlawful and the Obama administration had exceeded its authority by raising the overtime salary limit so significantly. In his decision, Mazzant argued the rule was imposed “without statutory authority”. Here’s what Alabama officials think of Mazzant’s decision: Alabama Attorney General Luther Strange: Another unlawful Obama administration expansion of authority has been met by a federal court roadblock,” said Attorney General Luther Strange. “The granting of a nationwide preliminary injunction of the new federal overtime rule, just days before its implementation, ensures that cash-strapped state and local governments will not be forced to lay off employees or cut vital services to the public in order to meet this costly federal mandate. I am pleased the federal court granted the motion by Alabama and 20 other states to block the new Obama administration overtime rule and protect many public and private sector jobs. U.S. Senator Richard Shelby: I have heard from Alabamians all across the state about the harmful impacts that the Obama Administration’s overtime rule would have on small businesses, non-profits, universities, and employees alike. Americans spoke loud and clear about their frustration with these types of unilateral executive regulations that stifle economic growth and opportunity. Yesterday’s ruling is a victory for the American people, and I look forward to working with President-elect Trump and my Republican colleagues to reverse this and other job-destroying rules in the coming months. Alabama 1st District U.S. Rep. Bradley Byrne: This rule was never what the Obama Administration wanted people to believe it was. Instead, the rule would have hurt American workers by moving them from salaried to hourly employees and greatly reducing opportunities for advancement. The rule would have been especially damaging for schools and non-profits, who couldn’t just increase costs to offset the added expenses. I appreciate Judge Mazzant’s decision and look forward to working with the Trump Administration to pursue policies that actually benefit American workers. Alabama 2nd District U.S. Rep. Martha Roby: This decision is a conservative victory for the 21 states and dozens of business groups who challenged that this new rule handed down by President Obama’s Department of Labor would increase government costs while costing private employers millions of dollars. We all want incomes to rise, but top-down government mandates that ultimately cost workers are not the way to make it happen. We need 21st century workforce policies that offer workers choices and flexibility, and we need to enact them properly through Congress. I’m pleased that the courts have once again rejected the Obama Administration’s attempt to circumvent Congress and legislate by executive fiat. This decision and others like it will help return our country to constitutional order. The law was set to take effect Dec. 1. Alabama and 20 other states joined the suit, saying the law would significantly increase employment costs.
Ala. Attorney General Luther Strange challenges new overtime rule
Alabama Attorney General Luther Strange has joined a coalition of 21 states in filing a federal court complaint challenging the U.S. Department of Labor’s new overtime rule. If implemented, the new rule will more than double the minimum salary overtime threshold — from $455/wk to $913/wk — for public and private workers without Congressional authorization. The complaint urges the court to prevent the implementation of the new rule before it takes effect, which is scheduled for December 1, 2016. The rule will force many state and local governments to substantially increase their employment costs. Some governments may be forced to eliminate some services and even lay off employees. “Once again, the Obama Administration has illegally expanded its own authority without thinking about the costs or consequences to the American people,” said AG Strange. “State budgets are already tight, and this one-size-fits-all rule could result in layoffs, understaffed government offices, and long lines for basic services. Ultimately, it will be the people who suffer the most from this latest example of federal overreach.“ On March 13, 2014, President Barack Obama ordered the Department of Labor to revise the Fair Labor Standards Act’s overtime exemption for executive, administrative and professional employees — the so-called “white collar” exemption — to account for the federal minimum wage. On May 23, 2016, the Department of Labor issued the final new overtime rule. It doubles the salary-level threshold for employees to be exempt from overtime, regardless of whether they perform executive, administrative, or professional duties. After December 1, 2016, all employees are entitled to overtime if they earn less than $913 a week—including state and local government employees. The new rule also contains a ratcheting mechanism to automatically increase the salary-level every three years without going through the standard rule-making process required by federal law. In addition to Alabama, other states who have joined the filing include: Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin.
Jeffrey Tucker: Obama’s overtime rules will cripple the young and ambitious
It’s Saturday evening. Are you working? It’s legal for now. Next year this time, it will be illegal unless you ding your employer for overtime pay. If your employer doesn’t agree to shell out, grab that clicker and watch some Netflix. Mandatory goofing off is your new way of life. In countless ways, the mandates are going to put in place new barriers to career advancement. The Department of Labor — with no debate or legislation but rather through regulatory fiat — plans to impose a rule that will cause deep injury to millions of workers. It will mandate that time-and-a-half pay be dramatically expanded to cover people who barely managed to escape such rules. It will apply to income as high as $47.4K per year, and be applicable to both wages and salaries. But hey, don’t worry, says the Department of Labor. “The final rule will become effective on December 1, 2016, giving employers more than six months to prepare.” More like: prepare for the doom of entry-level professional careers. The Prada Economy The press covering of the controversy describes this as a curb on the “Prada economy.” This refers to the strenuous demands placed on young, ambitious workers in the movie, “The Devil Wears Prada.” This is somehow supposed to improve the world. It won’t. Such workers get entry-level pay, above the old threshold but below the new one, but work grueling hours. They must be available nights and weekends. They are asked to perform incredible feats. If they fail, there is someone else to replace them. If they succeed, they are on the road to success in the industry. The exemption from overtime rules is what makes the Prada economy work. It’s not just fashion. Or the movies. Or politics. It’s nearly every profession, from retail to law to medicine to technology to finance. To really make it in an industry, you need more than a connection and a credential. You have to show that you have the stuff. You need to demonstrate your personal commitment. And you will typically be tasked to show this while living on a low salary — not so low as to qualify for overtime but not high either. Is this just some random cruelty that bosses put their workers through? Not at all. There’s a method to the madness. The employee needs to onboard quickly to get to know the business and the firm. There’s so much to learn in so many areas of the business. To start in such positions and work your way up is how you gain the necessary knowledge to exercise more responsibility later. There is also a matter of what used to be called the “work ethic.” It’s surprising how many people tend to underestimate their own potential to be productive. Maybe it is just human nature to be comfortable and slip into lazy routines. Real success requires that you break free from that habit. You need to test yourself and discover that you are capable of more. You do this at the start of your career and you develop new habits. You see your productive potential in a different way. You do things you never thought possible. Your work becomes a life mission. Your life becomes more fulfilling. Athletes understand this. If you want to go pro or go Olympic, you have to find ever newer and deeper sources of energy within you. You have to go beyond what you ever thought possible. You have to challenge yourself: never be satisfied with your previous record, but rather use that as a benchmark to beat on the way to the next record. The recently deceased Muhammad Ali put it well: “I hated every minute of training, but I said, ‘Don’t quit. Suffer now and live the rest of your life as a champion.’” In sports, we understand that this is awesome and the way it should be. Why should it be different in business? Must government coddle people, prevent them from trying to achieve new things, dampen the human spirit, eliminate competition? But We Must Be Equal Yes, precisely, says Salon. “Good riddance to the Prada economy,” the site says. “If it takes a low-paying, schedule-devouring job to enter politics, the movies, publishing, or anything else, the only people who can enter those fields will be people with considerable financial resources. This would just be a footnote if our culture and our politics weren’t fairly important spheres of American life.” And because some people have more financial resources than others, the Prada economy just has to be abolished. Opportunities for achievement have to be crushed. No one should be allowed to advance over others. And this will increase the diversity we see in a number of different professions. It’s hard to know what to call this other than a malicious egalitarianism. You could use the same thinking to abolish wage differentials altogether. Educational differences have to go. Regional differences have to go. Anything that allows some to excel over others is rendered as an obvious injustice. Then all of life can be unchallenging, bland, gray, boring, routine, with the government dictating the meaning of achievement. Disemployment Is the Point It is rather obvious that such an overtime rule will hurt employees. Some salaried staff will be shifted to wages so they continue to achieve at the same financial results while working overtime. Other wage employees will just be cut back. This is all to the good, says the Department of Labor. A video from the bureaucracy imagines that newly cut-backed employees will join gyms, get in shape, and go to baseball games. So what will people actually do? They will take a second job or become Uber drivers, until that is made illegal too. Then the government will have to monitor half the workforce to make sure you aren’t trying too hard to become excellent, since that would be contrary to the goal of a unified population in which no one is better than anyone
Alabama business roundup: Headlines from across the state
Here’s a roundup of some of the top weekend business headlines from across the state: AL.com: Japanese auto investment climbs in the U.S., including Alabama Total investments by Japanese automakers in their U.S. operations reached nearly $43 billion last year, according to new data from the Japan Automobile Manufacturers Association. That’s up from $40.6 billion in 2013. Direct employment at the automakers also grew to 91,122, up from 82,816 the previous year. “These figures demonstrate the ongoing commitment of Japanese automakers to the U.S. auto market and they signal a new day in Japanese brand auto manufacturing in America,” Ron Bookbinder, General Director of JAMA USA, said in a prepared statement. In Alabama, Japan’s Honda and Toyota each have a major manufacturing presence, and they have been part of the growth. Honda’s $2 billion, 4,000-worker auto assembly plant in Talladega County recently kicked off production of the redesigned 2016 Pilot SUV and officially opened a $71 million, highly-automated engine assembly line. During the past three years, the plant has announced new investments of more than $508 million for projects to improve flexibility, enhance quality and increase production. It also has added more than 450 jobs. As for Toyota, the automaker’s Huntsville engine plant last year marked an $80 million expansion project and the production of its 3 millionth engine. It is the only Toyota plant worldwide to produce four-cylinder, V-6 and V-8 engines under one roof. Birmingham Business Journal: Report: Walter Energy bankruptcy talks accelerate Walter Energy Inc.’s negotiations with creditors are accelerating and could trigger a bankruptcy filing by July 15, according to a report. Bloomberg is reporting that the Birmingham-based coal company and its senior creditors are in negotiations that could result in the company being handed over to lenders. The company has declined to comment on the report. Lenders are offering to back a loan to fund the company’s operations during bankruptcy and are asking for union support of the plan in exchange for financing the loan, according to the report. Walter (NYSE: WLT) has been in bankruptcy negotiations for the last three months, as the metallurgical coal market has taken a severe downturn. Related: Coal War: Alabama mining sector rocked by shifting market According to the report, Walter’s senior lenders also want the company to file for bankruptcy by July 15, which is the end date for the grace period on a $19 million interest payment due to junior bondholders. Walter’s fortunes have declined dramatically in recent years. Its stock, which once traded at more than $100 per share, now hovers around 20 cents per share. The company has also notified hundreds of employees of potential layoffs if the coal market doesn’t turn around. Birmingham Business Journal: Coal War, Part V: Could natural gas spell trouble for coal in Alabama? *Editor’s Note: This is the fifth and final installment of the BBJ’s five-part online series investigating the state of Alabama’s coal industry and its future.* Energy swapping is occurring at utilities around the country, and Alabama Power Co. is no exception. The Birmingham-based subsidiary of Southern Co. was recently ordered by the Environmental Protection Agency to expedite its efforts to cut coal-fired emissions. The company will achieve this by permanently closing three coal-fired units in Alabama, in addition to swapping four others to natural gas. Despite the cuts, Alabama is one of the leading states for electricity output – generating more in April 2015 than Mississippi and Kentucky combined, according to data from the Energy Information Administration. The new regulations, however, favor Alabama Power swapping its energy usage from coal to natural gas, which could mean changes in rates and employment down the road. It’s a trend that could also affect Birmingham’s coal industry, which is already reeling from a number of other market factors. Natural gas vs. coal in Alabama Michael Sznajderman, a spokesman for Alabama Power, told the BBJ that the company expects to see the trend of replacing coal use with natural gas to increase in the future. “We are switching some coal units to natural gas … Renewables may also play a big role in our fuel mix in coming years,” he said. Sznajderman said the company historically purchases 25 percent of the coal used from Alabama producers. At the end of the first quarter of 2015, coal accounted for 47 percent of the sources of generation for all of Alabama Power’s production – down from 54 percent in 2014, Sznajderman said. This comes out to roughly 11.75 percent of Alabama Power’s total energy use coming from coal mined in Alabama, where thermal coal is secondary to the more expensive and abundant metallurgical coal – which has taken a major hit due to the downturn in the steel market. Thermal coal accounts for just 9 percent of coal exports from the state. “We support having a diversity of fuel sources,” Sznajderman said. “Having that ability to move from one fuel source to another gives us important flexibility to keep our rates affordable amid fluctuating fuel prices and changing regulations.” In the market While natural gas may seem like a burgeoning threat to coal production in Alabama, production and withdrawal of natural gas in Alabama has decreased sharply since peak withdrawals from Alabama gas wells in 1996. Coal production in Alabama hit its peak in the same decade, topping out in 1990 at 29 million tons of capacity, before embarking on its recent decline. American exports of natural gas – some of which comes from Alabama – has seen a steady rise in price since peak production, while natural gas imports have followed the opposite trend, according to data from the U.S. Energy Information Administration. Jason Hayes, associate director of the American Coal Council in Washington D.C., told the Birmingham Business Journal the motive behind energy swapping is simple to understand – bottom line efficiency. “What we are seeing is fuel switching, so natural gas prices are staying low, and the swapping is basically the utility industry saying ‘If we can produce the most electricity for the least amount of money, then
President proposes to expand overtime for almost 5 million workers
They’re called managers, and they sometimes work grueling schedules at fast food chains and retail stores. But with no overtime eligibility, their pay may be lower per hour than many workers they supervise. With those employees in mind, the Obama administration is proposing making up to 5 million more people eligible for overtime, its latest effort to boost pay for lower-income workers. These workers would benefit from rules requiring businesses to pay eligible employees 1 1/2 times their regular pay for any work beyond 40 hours a week. “We’ve got to keep making sure hard work is rewarded,” President Barack Obama wrote in an op-ed published Monday in The Huffington Post. “That’s how America should do business. In this country, a hard day’s work deserves a fair day’s pay.” Employers can now often get around the rules: Any salaried employee who’s paid more than $455 a week — or $23,660 a year — can be called a “manager,” given limited supervisory duties and made ineligible for overtime. Yet that would put a family of four in poverty territory. Obama says that the level is too low and undercuts the intent of the overtime law. The threshold was last updated in 2004 and has been eroded by inflation. The long-awaited overtime rule from the Labor Department would more than double the threshold at which employers can avoid paying overtime, to $970 a week by next year. That would mean salaried employees earning less than $50,440 a year would be assured overtime if they work more than 40 hours per week. To keep up with future inflation and wage growth, the proposal will peg the salary threshold at the 40th percentile of income. The White House said 56 percent of those who would benefit in the first year are women, and 53 percent have a college degree. With the higher threshold, many more Americans — from fast food and retail supervisors to bank branch managers and insurance claims adjusters — would become eligible for overtime. A threshold of $984 a week would cover 15 million people, according to the liberal Economic Policy Institute. In 1975, overtime rules covered 65 percent of salaried workers. Today, it’s just 8 percent, the White House says. The beneficiaries would be people like Brittany Swa, 30, a former manager of a Chipotle restaurant in Denver. As a management trainee, she started as an entry-level crew member in March 2010. After several months she began working as an “apprentice,” which required a minimum 50-hour work week. Yet her duties changed little. She had a key to the shop and could make bank deposits, but otherwise spent nearly all her time preparing orders and working the cash register. She frequently worked 60 hours a week but didn’t get overtime because she earned $36,000. The grueling hours continued after she was promoted to store manager in October 2010. She left two years later, and now processes workers’ compensation claims at Travelers. She makes $60,000 a year, “which is surprising, since I only work 40 hours a week,” she says. Swa has joined a class-action lawsuit against Chipotle, which charges that apprentices shouldn’t be classified as managers exempt from overtime. A spokesman for Chipotle declined to comment on the case. Dawn Hughey, a former store manager for Dollar General in Flint, Mich., would have also benefited from a higher overtime threshold. Hughey worked 60 to 80 hours a week for about two years before being fired in 2011. She was paid $34,700. “I missed a lot of family functions working like that,” Hughey said. “It was just expected if you were a store manager.” She made about $45,000 a year as an hourly worker in a previous job at a Rite Aid in California, where she typically worked 48 hours a week and received overtime. The White House’s proposed changes will be open for public comment and finalized sometime next year. They can be enacted through regulation without approval by the Republican-led Congress. They set up a populist economic argument that Democrats have already been embracing in the run-up to the 2016 presidential election. Vermont Sen. Bernie Sanders, who is challenging Hillary Rodham Clinton for the Democratic nomination, said the proposal means businesses would no longer be able to shirk their responsibility to pay fair wages. “This long overdue change in overtime rules is a step in the right direction and good news for workers,” Sanders said. Yet the proposals won’t necessarily produce a big raise for people like Swa and Hughey. The National Retail Federation, a business group, says its members would probably respond by converting many salaried workers to hourly status, which could cost them benefits such as paid vacation. Other salaried workers would have their hours cut and wouldn’t receive higher pay. Businesses might hire additional workers to avoid paying overtime or extend the hours they give part-timers. Yet supporters of extending overtime coverage say they would welcome those changes. “It’s a job creation measure,” said Daniel Hamermesh, an economist at the University of Texas, Austin. “Employers will substitute workers for hours, when the hours get more expensive.” Republished with permission of The Associated Press.
