Robert Mayfield, owner of 13 Dairy Queen franchises in Austin, Texas, is pushing back against the Department of Labor's recent overtime regulation changes, calling them an overreach into small business operations.

Mayfield argues that the updated rules imposing higher salary thresholds for overtime pay exemptions threaten to significantly disrupt the compensation structure for his management staff, as Fox Business reports.

For years, Mayfield, known locally as the "King of Queens," has led his family's business, building on the legacy his father started in the late 1940s. His father transitioned from cowboy to restaurateur, establishing the first Dairy Queen in the region.

The controversy revolves around a recently enforced federal mandate. As of July 1, 2024, the Department of Labor increased the minimum salary required for an employee to be exempt from overtime pay to $43,888. This figure will rise again to $58,656 on Jan. 1, 2025, expanding overtime eligibility to an estimated 4 million workers nationally.

Arguments Against Federal Regulation

Mayfield's legal representatives from the Pacific Legal Foundation have challenged this regulation, arguing that the salary criteria exceed the department's power.

They cite the non-delegation doctrine as a key point in their argument. This has been a contentious topic, especially as a ruling by the Fifth U.S. Circuit Court of Appeals previously upheld the Labor Department's policy, emphasizing the relationship between salary and job responsibilities.

The threshold for overtime exemption has been a static point for over 15 years until it experienced an increase to $35,568 in 2020. Mayfield maintains that he already compensates his workforce generously by starting hourly employees at $15 per hour, which surpasses both state and federal minimum wage standards.

His approach also includes incentivizing management with performance-based bonuses. "Managers don’t even look at the hours," Mayfield notes. "If they make profits, then they get the bonus. It’s the closest thing you can get to owning your own business."

Impact on Managers and Workforce

Mayfield expresses concern that these changes will harm the very workers they intend to benefit. "It’s going to hurt the people they say they’re going to help," he warns, alongside appeals to proponents of the law to reassess their stance with regard to small businesses.

Acting Secretary of Labor Julie Su counters that the goal of these regulations is to address disparities between salaried and hourly employees. In her view, lower-paid salaried workers often perform similar tasks yet work longer hours without additional compensation, which she considers unacceptable.

The judicial system has seen related challenges, with a federal judge setting a temporary block on the rule's application to Texas state employees in light of a legal challenge earlier this year. As the legal battle continues, Mayfield has requested a full hearing from the Fifth Circuit, with intentions to appeal to the Supreme Court should the need arise.

Future of Overtime Regulation

The backdrop of this issue includes a potential shift in regulatory power, with the Supreme Court recently limiting agency powers under the Chevron doctrine. This has led to speculation on future decisions regarding federal agency authority.

Some members of Congress, primarily Democrats, are advocating for a further increase in the salary threshold, proposing adjustments to align with the 55th percentile of salaried workers’ earnings.

This could raise the threshold to at least $82,732 by 2026, with proponents arguing for subsequent annual increases.

Mayfield’s criticism is grounded in the belief that federal oversight is overstepping, describing this as a breach in the separation of powers. He and his legal team argue that Congress, not the secretary of Labor, should be responsible for enacting such economic policies.

Small Business Perspectives on Legislation

“We have a fundamental breakdown in separation of powers,” asserts Luke Wake from the Pacific Legal Foundation. He underscores the importance of revisiting and potentially revamping the non-delegation doctrine, labeling it as the "next major battle" in the fight against expanding the administrative state.

As the debate continues, Mayfield remains steadfast in his position, urging advocates of the regulatory changes to reconsider. "This is free enterprise," he emphasizes, reflecting his belief in a business ecosystem reliant on choice and individual decision-making.

The outcome of this dispute could have lasting effects on small business owners like Mayfield and shape future deliberations on the reach of federal labor policies.