Biden administrations proposed overtime rule raises concerns among trade groups, impacting small businesses

Last Updated on September 3, 2023 by Robert C. Hoopes

Title: Biden Administration’s Overtime Rule Faces Criticism from Trade Groups

The Biden administration’s push to increase overtime for millions of workers has sparked backlash from various trade groups. The proposed rule, known as “Restoring and Extending Overtime Protections,” aims to mandate employers to pay overtime to certain workers earning less than approximately $55,000 per year.

Among the detractors are retail and hospitality trade groups, which have expressed concerns over the potential negative impact on struggling small businesses faced with inflationary pressures. Notably, the National Retail Federation argues that the proposed threshold exceeds the rate of inflation, while also questioning the administration’s authority to constrain future administrations through automatic increases.

The American Hotel & Lodging Association (AHLA) also joins the criticism, highlighting the proposed increase in overtime thresholds as a potentially disruptive change that could have adverse economic effects on both hotel workers and employers.

Critics predict that the rule would create difficulties for entry-level workers seeking job opportunities and hinder growth prospects in certain industries. The Partnership to Protect Workplace Opportunity argues that substantial increases in labor costs cannot be absorbed by businesses, leading to reduced opportunities, especially for recent graduates and younger professionals.

The Biden administration, however, views the proposed rule as a triumph for workers’ rights, emphasizing the importance of a 40-hour workweek and increased compensation for extra hours.

Legal challenges may lie ahead for the proposal, following a similar fate as the Obama administration’s failed attempt to raise the overtime threshold in 2016. A federal court in Texas deemed the Obama administration’s proposal rendered the exemption for managers irrelevant.

As the Biden administration presses on with its proposed overtime rule, the criticism from trade groups underscores the ongoing debate over its potential impact on businesses and workers alike. Future legal challenges will likely play a pivotal role in determining the fate of the rule and its ramifications for the labor market.