Advocacy in Action | December 17, 2024

Overtime Rule Struck Down  

On Friday, November 15, a federal court in Texas struck down the Department of Labor’s 2024 Overtime Rule, preventing costly changes to salary thresholds that would have impacted restaurants nationwide.

The Restaurant Law Center and Texas Restaurant Association co-lead the coalition challenging the rule, and the court found that DOL exceeded its authority by prioritizing salary over job duties, which contradicted the requirements of the Fair Labor Standards Act (FLSA).

What do restaurants need to know?

• The court ruled that the 2024 rule’s salary thresholds "effectively eliminate" consideration of whether an employee performs exempt duties, violating the FLSA
• Automatic updates to the salary threshold every three years were also invalidated for violating notice-and-comment rulemaking requirements of the Administrative Procedure Act (APA)
• The minimum salary threshold reverts to $35,568/year ($684/week), and the highly compensated employee threshold reverts to $107,432/year

What’s next in Washington DC?

• With only a few weeks left in the Biden administration, the DOL is unlikely to appeal the decision. Even if it did, a Trump administration, set to take office in January 2025, would likely drop the appeal
• A Trump DOL could issue its own rulemaking to update the threshold—the $684/week threshold was set under the first Trump term in 2019

What comes next for restaurants?

• The January 1, 2025, increase will not go into effect as scheduled, and as a matter of law, the July 1, 2024 increase is nullified
• Employers that previously adjusted the salaries or exemption status of employees who earned less than the salary threshold set by the now-invalidated July 1 increase are advised to consult with legal counsel (preferably with a labor law firm) before considering whether to rescind those changes on a going-forward basis

This win is because of the National Restaurant Association fighting for you in court. As a member of the Connecticut Restaurant Association, you are members of the National Restaurant Association. This legal battle, waged on your behalf by the association saved the average restaurant $40,000 annually.

Beneficial Ownership Information Reporting Blocked 

In previous member emails, we’ve mentioned a new Beneficial Owner Information reporting requirement from the federal government for small businesses. This requirement has recently been preliminarily blocked by a federal court.

The reporting mandate, known as “beneficial ownership information” under the Corporate Transparency Act (CTA), would have triggered penalties for business owners who had not complied by January 1, 2025.

Before the court decision to halt the rule, small businesses with less than $5 million in annual revenue and less than 20 full-time employees were required to report on their ownership structure, business addresses, and other information to a subagency of the US Department of Treasury.

The Treasury Department reported in October that it had received just 10% of the required submissions to comply before penalties would begin in 2025. Many attributed the low compliance rate to a lack of awareness among small businesses, insufficient outreach & education from the federal government, and a tight time frame for compliance.

What’s Next?
It remains to be seen how new Treasury Department leadership in 2025 will handle the CTA and its reporting requirements, but Vice President-elect J.D. Vance has criticized the CTA and its burdens on small businesses.

Meet Chase: Public Affairs Assistant 

Meet Chase - the CRA Public Affairs Assistant. After receiving his Bachelor's Degree in Political Science from Central Connecticut State University, Chase is pursuing his Master's Degree in Public Policy at UConn.

"It has long been a goal of mine to enter the political sphere, and I view this opportunity as the next step on my path to achieving that goal. I’m greatly looking forward to taking on responsibilities related to the legislative agenda of the CRA, and to participating in the legislative process from the point of view of a non-profit association."

Chase is also a proud member of the food service industry and currently works as a bartender. Since joining our team in September, Chase has played a key role in developing the newly launched Advocacy in Action emails. He has also actively participated in advocacy events across Connecticut and provides valuable support to the team as we enter Legislative Session.

Payment Card Settlement Deadline Extended 

There is now additional time for Visa and Mastercard merchants to claim their share of the Payment Card Interchange Fee Settlement If your restaurant accepted Visa and/or Mastercard between Jan. 1, 2004 and Jan. 25, 2019, then you could be entitled to a share of the settlement.

The Payment Card Settlement deadline has been extended to February 4, 2025.

National Updates

Alaska voted in favor of gradually raising the minimum wage to $15 an hour, and also in favor of mandatory accrued sick leave of up to 56 hours for employers that employ 15 or more workers.

Arizona voted overwhelmingly against Proposition 138, which would have allowed employers to pay tipped workers up to 25% less than the minimum wage, assuming that the employer can prove that the employee is paid overall at least $2 more per hour than the minimum wage.

California votes no on Proposition 32, which would have raised the minimum wage to $18 per hour by 2026. Proposition 32 narrowly failed during the 2024 election season, receiving 49.3% of the vote according to the Associated Press. The minimum wage in California will remain $16 per hour.

Massachusetts voted against raising the minimum wage for tipped workers. Under the legislation, the tipped minimum wage would have gradually increased until being phased out altogether by 2029.

Missouri voted to increase the minimum wage to $15 an hour by 2026, and also voted in favor of mandating paid sick leave, with businesses now required to provide one hour of paid sick leave for every 30 hours of work. 

Nebraska voted in favor of mandating paid sick leave, with employers now required to provide 56 hours of paid sick leave employees at companies 20 or more workers, and 40 hours for smaller companies.