On Nov. 22, U.S. District Judge Amos L. Mazzant issued a memorandum opinion and order that stopped the U.S. Department of Labor’s (DOL) overtime regulations from going into effect on Dec. 1. This means that shop owners will not have to worry about the increased threshold from $23,660 to $47,3476 to pay overtime employees—at least not yet.
The memorandum issued by Judge Mazzant does not mean that these regulations will not come into play. The DOL has already challenged the motion. On Dec. 1, in an attempt to move forward with the stricter regulations, the DOL filed an appeal to the injunction and on Dec. 2, filed a motion to expedite the briefing. Another major factor to consider is the newly appointed White House administration. President-elect Donald Trump, along with a number of newly elected officials, will have the power to change the outcome of this issue. Shop owners will have to pay close attention in the next few months to see what happens, and make sure they are prepared.
The Automotive Service Association (ASA) held a webinar back in June to educate its members on the new threshold issued by the DOL, which, at that time, was set to be put into place on Dec. 1. The webinar attendees had many questions on how to restructure their pay plans and who would be exempt. The webinar, which featured speakers Ed Cushman, shop owner of C&H Foreign Auto Repair in Spokane, Wash., and Brian Frrington, a lawyer for Cowles & Thompson’s Employment Law Practice Group in Dallas, urged attendees to consult with an accountant or lawyer to make sure they were in compliance.
Farrington explained in a follow-up conversation with Ratchet+Wrench that in his experience, mechanical repair shops tend to misclassify three types of workers—subordinate supervisors, office managers, and service writers and estimators. The proposed regulations would mean that these workers would need to be classified appropriately in order to be in compliance. A number of different industry professionals—from lawyers to shop owners to consultants—all recommended that shop owners gather as much information as possible and speak with an employment law professional. Had it been put into effect, were shop owners ready for the Dec. 1 deadline? For many, the answer was no.
A Welcome Relief
For many shop owners, this stall may have come as a welcome surprise. Mary Jo Dolson, a member of the state and local team at Skoda Minotti Strategic Marketing, a company that provides business and financial advice, said back in November that many of her clients were not ready for the Dec. 1 deadline. The DOL announced the proposed changes in May, and Dolson thinks that many of her clients put it on the backburner. Bob Redding, ASA’s Washington, D.C., representative, says that the Dec. 1 deadline was unrealistic and an unnecessary burden. Bill Havey, president and CEO of the Auto Care Association (ACA) said that he experienced a sense of relief when he heard the news about the injunction.
The Silver Lining
While shop owners that were not prepared may be rejoicing, others may think they did a lot of unnecessary work. Not the case, Hanvey says. Although the timing may be unfortunate, being given a deadline forced many to look at the way their businesses were structured, which created an opportunity for improvement.
Whether or not the DOL’s rule will go through is anyone’s guess. The DOL made a quick appeal, but Redding notes that the preliminary injunction will allow for Congress and the new administration to more carefully consider options. The ASA is hopeful that the new overtime rules will be eliminated. Hanvey, on the other, supports an update to the regulations, but at a more gradual pace.
The future is unclear, but what is known is that shop owners have been given more time. The extra time can be used to become more prepared and informed if the DOL’s rule does move forward. If nothing else, shop owners will benefit from a greater understanding of how their business is run and the tasks that their employees perform. Hanvey says that the deadline extension gives the industry an opportunity to properly evaluate staffing and positions.
For shop owners that have changed titles and increased salaries, Hanvey doesn’t think it’s a good idea to go back on that. However, shop owners that took a different approach and switched salaried employees to hourly may have an opportunity to reconsider.
Cover Your Bases
Regardless of what happens, business owners need to make sure they have a firm understanding of what each of their employees do and how much they currently make, Dolson says. In order to do this, she advises making a list of each employee’s duties and determining based off that whether or not this rule will apply if it moves forward.