Foon Rhee

Why managers aren’t smiling this holiday season

Andrew Puzder, chief executive of CKE Restaurants, is President-elect Donald Trump’s nominee for labor secretary. He opposes expanding overtime pay.
Andrew Puzder, chief executive of CKE Restaurants, is President-elect Donald Trump’s nominee for labor secretary. He opposes expanding overtime pay. Los Angeles Times file

This holiday season, there’s even more reason to feel for all those store managers slaving away so we can shop whenever we want.

Many were expecting to finally start getting overtime pay on Dec. 1. But it was snatched away at the last minute.

The mean Mr. Grinch? A federal judge in Texas, who on the Tuesday before Thanksgiving blocked the Obama administration from extending time-and-a-half pay to 4.2 million salaried workers across America, including 146,000 in California.

While the Labor Department is appealing the judge’s ruling, this move for fairer pay appears dead for the foreseeable future.

Hillary Clinton backed the overtime rule, but the Republican Congress is on record opposing it. So is President-elect Donald Trump’s nominee for labor secretary – Andrew Puzder, CEO of the fast-food conglomerate that operates Carl’s Jr. and that relies on low-wage workers.

In this early test of Trump’s promises to help the working class, he is failing, big-league. All those supporters who believed he would put more money in their pockets are going to be as bitterly disappointed as they would be losing at slots in one of his bankrupt casinos.

But no one should be that surprised.

Even as he portrays himself as a savior for America’s workers (“Together, we will raise incomes and create millions and millions of new jobs,” he told supporters Friday in Michigan), his policies and some unguarded statements (he said during a Republican debate that wages are too high) show that was yet another fraud upon voters.

The overtime issue is happening at a time of worsening income inequality and a hollowing out of the middle class. The proposed rule’s supporters say it would have helped reverse those damaging trends.

President Barack Obama directed the Labor Department to take up this issue in 2014, after horror stories about managers at retail chains such as Wal-Mart having to work ridiculously long hours without additional pay. Ironically, Wal-Mart is among the companies that tried to get ahead of the rule. In September, it raised the starting pay for entry-level managers so it wouldn’t have to pay overtime.

Business groups and 21 states – including Arizona, Nevada and Texas, but not, of course, California – sued to block the rule. They argued that the change was too sweeping to be done without congressional approval.

Now under federal law, salaried employees in administrative, executive and professional jobs making $23,660 or more a year are not eligible for overtime even when they work more than 40 hours a week.

Under the rule that was blocked, “exempt” employees making less than $47,476 a year could have received overtime.

California already requires overtime pay for those making $41,600 or less a year, so the proposed federal rule would cover 146,000 employees who earn less than the federal overtime threshold, but more than the state’s.

Also under the rule, the federal threshold would automatically go up every three years to keep up with wages. It hasn’t been raised since 2004. Only 7 percent of salaried employees fall under overtime protections, down from more than 60 percent in the 1970s, according to Obama’s Labor Department.

According to the Economic Policy Institute, the new rule would benefit many more workers – 12.5 million nationally (nearly one-fourth of all workers) and more than 1 million in California – who would either get overtime, not have to work more than 40 hours without pay, or would get a raise to put them above the overtime threshold.

Business groups raise some legitimate concerns that small restaurants and retailers can’t afford to raise manager pay above the threshold, but also can’t afford to pay them overtime. There are also questions about variations in cost of living and salaries.

You’d think officials could figure out a way to ease the pain for small businesses and account for regional differences but still accomplish the overall goal.

Then again, in today’s Washington, maybe a compromise like that is wishful thinking. It seems even less likely if Puzder leads the Labor Department under Trump.

Puzder, whose nomination was announced Thursday, has said the overtime rule would worsen “the extensive regulatory maze the Obama administration has imposed on employers” and would push companies to turn managers into hourly employees. “The real world is far different than the Labor Department’s Excel spreadsheet,” he wrote on the Forbes website in May, the day the agency released its proposal.

Co-chairman of Trump’s campaign finance operation in California, Puzder says the right policies will mean better wages. But advocates and Democrats immediately blasted his record as anti-worker, citing labor violations and his vocal opposition to raising the minimum wage. At his confirmation hearings, he’ll also likely be grilled about those TV ads of scantily clad women salivating over heart-attack-waiting-to-happen burgers.

If the overtime rule is trashed, it will be yet another part of President Barack Obama’s legacy that is torn up – again at the hands of a federal judge in Texas, and this time by one he put on the bench. Obama tried to use his executive powers and administrative actions to bypass the GOP Congress on immigration, climate change and more, expecting his successor to preserve his actions.

But court decisions and Trump’s election ruined those plans.

And now all those workers who expected to get overtime just in time for the holidays ended up with a big lump of coal in their Christmas stockings instead. Under a President Trump, they better get used to it.

Foon Rhee: 916-321-1913, @foonrhee

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