By CSD Staff
With just days before it was scheduled to take effect, a federal judge on Nov. 22 halted the implementation of a rule that would have extended overtime eligibility to some 4 million Americans.
The Labor Department’s reworking of the overtime rule, crafted by the Obama administration, would have required employers to pay time-and-a-half to their employees who worked more than 40 hours in a given week and earned less than $47,476 a year.
Critics claimed the mandate would force retailers to accept reduced profits or cause them to raise the price of goods to cover added expenses. Others feared such a wage hike could result in fewer jobs.
That one decision by a federal judge gave unprepared employers a reprieve to solidify their planning. For others such as Doug Galli, vice president and general manager of Reid Stores, it was a reprieve at a time when hard decisions were being made.
“We had a plan in place to move our store managers to non-exempt. It would have cost us around $200,000/year in overtime,” said Galli. “We ask our store managers to work a 46-hour work week. They averaged around 47-48 (hours). We feel that is fair. Most of our store managers were upset with the change. They would lose flexibility with scheduling; the bonus program would be reduced because it would have to be calculated on the number of hours they worked. It was a real nightmare.”
Now, as a new administration prepares to take charge, wage initiatives and the potential effects they have on U.S. businesses—including convenience stores—are sure to surface regularly over the next four years.
President-elect Donald Trump’s pick to lead the U.S. Department of Labor—and have a large influence on what direction the new administration takes—is Andy Puzder, president and CEO of CKE Restaurants Inc., which includes the Hardee’s fast food chain. A Trump supporter during the presidential campaign, Puzder has criticized President Obama’s proposal to increase the federal minimum wage to $10.10 an hour from $7.25, calling it counterproductive.
Galli called the fast-food maverick a great choice.
“We need people in the Department of Labor that know and understand how to create jobs and what it means to run a profitable business. The labor increases (especially in New York State) and work rules have been nearly impossible to follow. We have had to raise our retails two years running just to stay ahead of the payroll increases with more to come in our ‘blue’ state.”
Reid Stores Inc. is a division of the Reid Group, which operates 50 locations throughout western New York and northwestern Pennsylvania. The group of companies also includes Reid Petroleum Corp. an independent, full-service marketer of motor fuels.
Galli, who also chaired the New York Association of Convenience Stores (NYACS) this year, said association members of NYACS have been on the front lines of New York State’s wage wars. Most believe that the contrast between living-wage initiatives and the cost of doing business is stark. Crosby’s is no exception.
STRIKING A BALANCE
“We do believe that there has to be a balance struck between business and personal needs. As a company we re-invest in our stores and facilities as well as grow through acquisition,” Galli said. “We pay a competitive wage with a very nice bonus program for our management teams. We would have to eliminate the bonus and reduce the flexibility we allow our exempt store managers if the overtime rate is held up. Regardless of what the federal government does, doing business in New York State, we are already on the path of much higher wages.”
Before the measure was suspended by the federal judge, Puzder had been vocal against new overtime rules proposed by the U.S. Department of Labor, a position seemingly aligned with the new president-elect.