Tahoe businesses wait for courts to weigh-in on overtime laws
Nearly one week ago, some employees here in the Tahoe Basin and around the country were expecting a pay increase as a result of changes to overtime laws. One week later, some of those employees are still waiting, as are some employers, both stuck in a holding pattern.
“It puts everyone in a very awkward situation and hopefully this will get resolved in the court system very, very soon,” said Justin Sinner, membership services director at the Lake Tahoe South Shore Chamber of Commerce.
The awkward situation Sinner referenced stems from an injunction granted by U.S. District Court Judge Amos Mazzant on Nov. 22. The legal decision effectively halted implementation of changes to the nation’s overtime laws — changes that were set to take effect Dec. 1.
The Department of Justice has since filed a notice to appeal the preliminary injunction to the U.S. Circuit Court of Appeals for the Fifth Circuit, according to the Department of Labor.
The new rule would have changed the threshold requiring salary employees be paid overtime from less than $455 per week to less than $913 per week, or $47,476 per year.
Employers had to either give raises to salary employees so that they made more than the new threshold, or switch the employee to hourly and either pay them overtime or cap them at 40 hours per week.
The update was heralded by labor groups such as the AFL-CIO, who felt it was long overdue, and condemned by business groups including the National Small Business Association, which said the changes would be far too costly for small businesses.
The injunction has since left businesses and employees waiting to see if the changes will be upheld.
At the Hard Rock Hotel & Casino Lake Tahoe, the uncertainty in the courts froze raises for a small number of employees who were promised pay increases in order to comply with the changes.
“All we can do is wait until the outcome from the federal law is clear,” said Ross Miller, executive vice president at Paragon Gaming.
Miller’s comments came following remarks by a Hard Rock employee who agreed to speak only if the Tribune withheld the employee’s name.
The decision to freeze the pay increases for those employees — Miller said the number of impacted employees is a “very, very small number” — came as a shock and a disappointment, the employee said.
In the days after employees learned of the decision, the atmosphere had soured and morale was suffering, according to the employee.
Miller said he was unaware of any damage to employee moral and stressed that the company would do “the right thing” once the matter was resolved in court.
In general, Sinner said the situation in the courts has led to confusion among South Shore employers, many of whom run small businesses with tight margins. While there are some situations similar to that at the Hard Rock, many South Shore businesses were planning to make employees hourly and cap their hours.
“The overwhelming majority were going to cap their employees at that 40-hour mark and not do any overtime whatsoever,” Sinner said, referencing a practice that employers across the country were planning to implement in response to the rule change.
“For the time being we are in a wait-and-see mentality, unfortunately.”