“The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.” Milton Friedman
An article titled “Regulation Run Amok – And How to Fight Back” written by Charles Murray appeared in the May 11, 2015 issue of The Wall Street Journal. It should be stated at the outset that Mr. Murray’s article was limited to laws and regulations implemented at the federal level. It did not address city and state laws and regulations.
He said, “The number of federal crimes you could commit as of 2007 (the last year they were tallied) was about 4,450, a 50% increase since just 1980.” He also said, “the laws setting out these crimes are often so complicated that only lawyers, working in teams, know everything the law requires. Everyone knows how to obey the laws against robbery. No individual can know how to obey laws such as Sarbanes-Oxley (30,470 words), the Aff ordable Care Act (400,038 words) or Dodd-Frank (377,491 words).”
“Laws are just the beginning. In 2013, the Code of Federal Regulations numbered over 175,000 pages. Only a fraction of those pages involved regulations based on something spelled out in legislation.” In effect, Congress and our courts are leaving it to the regulators to make up the rules they think serve their goals.
The situation is compounded by the fact that, if a regulatory agency comes after you, you will not be dealing with a court of law or the legal principles with which we are all familiar. You will deal with an administrative court run by the regulatory agency itself. The analogy Mr. Murray uses is that “it is as if the police department could make up its own laws and then employ its own prosecutors, judges and courts of appeal.” There is not much fair about this process.
Just recently, the Department of Labor issued new rules on overtime. Those rules will affect your business. It is important that you understand what is required so that you can comply with the new requirements. Here are a few of the key details on the new rule.
The rule radically increases the salary threshold under which most employees will be automatically eligible for overtime pay. The current salary level requirement for exemption is $455 a week ($23,660 annually), which was last updated in 2004 The new exemption threshold is $913 a week ($47,476 annually). The compliance deadline is December 1, 2016.
The change in the salary threshold includes an automatic adjustment every three years. The adjustment is tied to the 40th percentile of full time salaried workers in the lowest wage region of the country (currently, the Southeast). So, you will have to be on your toes to stay current.
Here is the practical aspect of rules such as this. Excessive rules and regulations make running your business more complex. This rule will not result in a large amount of overtime pay winding up in the pockets of employees because it presumes employers will continue to run their business as they always have despite the penalty. They will not. The slow learner will pay fines to the federal government in the beginning. But all, some sooner, some later, will place stricter controls on overtime in their businesses. What will result will not be more overtime pay in the pockets of employees. Rather, there will be less time worked and less pay in those same pockets. It is a fact that you cannot force employers to spend money that they do not have.
It is no coincidence that survey after survey from around the U.S. indicates that investors in chambers of commerce expect us to advocate on their behalf especially in the public policy arena. There are a number of ways in which we strive to do so.
One way is to push back against excessive, unproductive regulation and legislation before it is enacted. We work with allies wherever we find them to kill excessive rules and legislation before it is created. Laws are easier to kill than rules enacted by, in some cases, mostly unaccountable bureaucrats.
Another way is to work with allies to overturn excessive rules by passing legislation. In the case of overtime rules, we are working with others to support the Protecting Workplace Advancement and Opportunity Act (S2707 and HR4773). This law, when it is passed, will cancel the overtime regulation.
Lastly, we want to provide you with information to help you comply, when necessary, so you can avoid unnecessary or inadvertent penalties. Information will help you make informed decisions to limit the impact of excessive rules and regulations on your business.
To help guide our efforts, our Public Policy Council and our Board of Directors have adopted a set of Guiding Principles. These principles clearly state what we will defend. I hope you will take the time to read them. If these are principles with which you agree, join us. We need all the help we can get.
Written by John Crutchfield, President/CEO, Greater Killeen Chamber of Commerce
Published in the Greater Killeen Business Quarterly 2016 Restaurant & Catering Guide