Dashboard: SCOTUS Unleashes a Tsunami of Regulatory Chaos

[Music] welcome to another 21 hats dashboard brought to you by our sponsor the great game of business I'm Lauren Feldman and I'm here with Gene marks welcome Jean we're back Lauren we're back great to have you here Jean on Friday the Supreme Court issued a ruling that I think is likely to get somewhat overlooked because it's kind of Technical and there's a lot of of other news swirling around right now especially with regard of course to the presidential election but this ruling involves regulation um and there have been a lot of predictions that this ruling has the potential to create regulatory CR chaos uh including for small businesses and that's because it overturns a concept that the Supreme Court established in I think 1984 and that has guided regulatory actions ever since let me see if I can explain it and listen to me carefully please correct me if I get anything wrong my understanding is that the 1984 ruling established that on those occasions when laws passed by Congress leave something a little vague or muddy whether by Design or because circumstances change over time um when that happens the courts were supposed to defer to federal agencies in determining how to enforce the law um the thinking was that these agencies were presumably staffed with people hired for their expertise and thus are most likely to make the best decisions but as of Friday the court has said no it shouldn't be the agencies who hold sway it's up to judges to interpret the laws passed by Congress do I have that right mostly I think and maybe you and I are going to say the same thing but it's not just if it's vague or misguided or or whatnot but the the Supreme Court basically ruled that their their guidelines were that when Congress passes a law um it then hands that legislation down to the appropriate agency to Implement and oversee that law and they're being given the uh sort of the Mandate um and the authority to to do that as long as it's in accordance with the law and of course as we all know the law itself can be interpreted in different ways but that's that's left up to the agency to decide so uh perfect you know perfect example right um if we dig into like details so this week um in fact you know today July 1 there's a new U law rule excuse me going into effect from the Department of Labor for overtime right so right now if you're paying employees and they're salaried workers and they're making less than about $35,000 this is prior to today and they um they meet other sort of requirements of classifications they're not supervising people they have certain titles you don't have to pay them any overtime wages well as of today that number goes up I forget what it goes up to like 40 2,000 or something and ultimately goes up to $59,000 um on January 1st of 2025 so what that means that is that as an employer um you're paying overtime more overtime to employees because they're the the Department of Labor is lifting the you know the the the wage level for which you can you you now have to you know pay those employees overtime okay so this is a Department of Labor Rule and it's under the Fair Labor standards act that's the legislation so Congress passes the fair labor standards act which basically you know you sets out guidelines for making sure that people are paid fairly across you know you know you different Industries and with different uh different definitions and then they turn to the Department of Labor to execute that law and the Department of Labor determined years ago that overtime pay uh would qualify under this Fair Labor standards act and therefore it is their purview and uh their right to issue regulations uh which are basically mandating employers uh to pay certain types of overtime wages depending on uh the circumstances and right now there's a course in court there's there's a case in Texas that is you know you know appealing this um and saying that this this overtime rule goes above and beyond uh the department Department of Labor's uh uh you know Authority and now because of last week's decision by the Supreme Court which passes down these decisions to a judge um this gives the judge in Texas even that much more power to determine whether or not the Department of Labor even has the authority if they're if they're interpreting the fair labor standards act correctly and they have the authority to increase overtime way I'm just using by the way one regulation you know but it is they're determining whether or not the Department of Labor has the the authority to do that and it'll be the judge's decision that's what the Supreme Court is in whatever the judge decides that's what you know that's that's what the the rule the law is going to be so it takes all of this sort of you know execution of laws and interpretation of laws out of the agency's hands and it puts it into the courts if there's any disputes and because of that I think it's going to have a wide ranging effect on a lot of businesses all around the country does that make sense absolutely um and you know some people are predicting chaos I think some people depending on your political leanings are expecting that this will be a good thing for uh a lot of a lot of businesses a lot of people who who who lean to the right the let me throw the objection that I hear uh at you and see what you say the the the objection the reason why uh I think a lot of people toward the left side of the spectrum have been dreading this decision coming down is they believe it exchanges uh expertise for something pretty close to politics uh the idea being that within the agency you have people who you know whose job it is to study these issues and come up with the best plan of impl imp implementation uh of the law that they can now you may disagree with that I you know with what they do but they you know there thousands you realiz I disagree with everything that you say so of course I'm going to disagree with that too but wait you can't disagree with what I said what I said was just factual in terms of why people on the left have been fearing this Rule and it's and it's it's certainly true the agencies are staffed to deal with these issues there are lots and lots of employees you know like with the ruling you're talking about whatever you feel about it there were analyses done to try to determine what the right number was at what level should the overtime kick in now they may have gotten it wrong I'm not making that argument but I'm saying that there were people who did studies looked at uh pay rates around the country and try to determine what the best number was to apply to the entire country obviously that's a complicated thing to do a judge in Texas doesn't have the staff to do that kind of analysis so you might prefer the judge's opinion but it's not based on the kind of um expertise and Analysis that you would want to have done for this kind of decision that does make a lot of sense and and you you are you are correct in that analysis I I certainly I can't disagree with that I was kidding before but I will say that the supporters of the Supreme Court's decision um and I don't know if you want to say they're more on the right or more on the left or whatever but um they they point to the fact that the overtime rule you know increase the overtime pay increase that we're looking at right now um is also politics because it is well well you know judges can be appointed for political reasons but presidents get elected and they appoint their Secretary of labors like Julie Sue who's now the acting Secretary of Labor and um she is you know pushing this rule change forward and then of course you know telling your staff to do the calculations behind it and you know you know that that so that's being done for political reasons because it's going towards the agenda of whatever Administration is in power for example um again we're sticking with this overtime rule the Obama Administration tried to raise this overtime pay if you remember uh back from you know to from like you know it was this current level of 35,000 to about 47,000 um some judge you know found reasoned why they couldn't do that the Obama Administration uh appealed that case and then the Trump Administration took over and they just stopped the appeal process so therefore that's why the overtime wages stayed the same over all this period of time because it wasn't being driven for you know for for a political agenda you know so one other thing that I want to also point out about this people some people say that it will create uncertainty um and I think that's absolutely right I mean I think John arensmeyer who is a listener uh of here and he he's he runs a great or small business majority um I know him and I've talked to him before and he's been a guest on this podcast long time friend of 21 hats and I am a fan of his as well so you know and but you know his I I've always argued with him or you know debated and friendly I I believe the organization leans a little bit to the left so you know it tends to be things that come out are are generally towards the supportive of you know of of S a Biden Administration and you know he holds his member he argues otherwise for the record and uh and he will tell you that his membership leans a little bit uh toward the right but go ahead I'm glad you're saying that in in his defense I really am glad because I don't want to start any fights here but I do want to say that he said um just today they released a press release saying that it will create more uncertainty I think he's absolutely right about that I I I mean there there's no argument there well how could it not it's changing the way that these things are going to be um resolved 100% but not only that it's like now like every rule is in play so and think about all the yeah all these rules even just under the Biden Administration but it can go back way before them think about just over the past few years we've had changes in worker classifications I just mentioned overtime rules how about the National Labor Relations Board all these you know allowing a lot of Union activities rules around sexual and you know you know racial discrimination from the EEOC rules from OSHA all of these now are subject to lawsuits all of these rules that these agencies are are are doing um now people can take them to court and the judge can decide whether or not it's under the agency's mandate to do something like this and um I I you know whether they interpreted the law correctly and it will create uncertainty there's no doubt about it you want to hear some irony about this yeah go ahead in the 1984 ruling that this overturns um was actually a unanimous 6 nothing decision written by a conservative appointee to the Supreme Court uh at the time that ruling was celebrated by conservatives because the courts were saying that Ronald Reagan's EPA uh should have the right to determine I should said the the court was saying the Supreme Court issued this ruling saying that Ronald Reagan's EPA should have the right to to determine how to enforce environmental laws or or not enforce them um at that time it was a uh a victory for conservatives that is really funny that really is well listen that was back in the day right so now we're talking things have changed since then agreed yeah do you know what the underlying case is for this one here this is kind of interesting too the underlying case that has resulted in this being overturned now involves a herring boat that was based I don't know it's still running or not but at the time that this all started it was based in K May New Jersey uh not far from where you and I both live lovely Town um the boat was required uh a fishing boat to take a government monitor out to sea to observe their fishing practices and the owner of the boat didn't mind that did not object to the monitor the boat the owner of the boat objected to being told he had to pay a fee for the Monitor and that fee was roughly equivalent to like a full salary it it was it was ridiculous um and he was right to complain clearly and his I don't know if it was his voice but the maybe it was the collective voice of other uh fishing boats that Voice Was Heard and the decision was reversed the fee was completely dropped any fees that were collected were refunded so as this case has made its way up through the courts there's essentially been no dispute because they didn't object to the monitor being there right right understood but the fee itself was yet another terrible it was ridiculous yeah and it R from the agency so it's whether you know there's one part of the rule to have the monitor there another part of the rule saying you're going to also have to pay so it's all again it just all gets back to how much power do the agencies have do we live in an administrative State can any uh can the executive branch um you know how much power does that have over businesses to operate and and although there's going to be a lot of uncertainty I mean I I think there will be some good things that come out of this I mean first of all if you're a lawyer you got to be really excited because it's gonna create a lot more work for you you know that's not gonna make anybody listening to this podcast happy true but in addition to that I mean I think business groups themselves are going to be that much more active I mean God the nfib the US chamber are going to go nuts um you know because they're the ones that are going to start these lawsuits um and call a lot of this in question what it might do though Lauren is and maybe I'm being too naive here but you know it might in the end cause you know government agencies to just write better regulations to think them through more to to do that much more you know research on their end to determine whether or not they do have the authority and the mandate to they're implementing this law in the right way all in advance that there are you know we can avoid these lawsuits and you know really it might turn out that some of these regulations that these agencies are doing for example overtime rules maybe that's above and beyond what their purview is and maybe they're it's determined that they they can't regulate what business is I don't know somebody has to determine that who who should determine it well I mean they might the the determination might be to do nothing at all I mean and again you might have a Department of Labor that is like you know what you know based on court rulings and based on on what we're seeing now in this new environment I don't maybe we just we really can't mess around with overtime rules anymore because it's not within our just let the market decide no minimum wage just yeah yeah and I got an isv uh I spoke to a handful of clients just today who are thrilled about that direction because they don't want to see mandates coming down from the federal government to force them to pay their employees more in overtime to force them into minimum wage to force them into mandated time off and all those things if it's not part of the Department of labors if they're overextending their Authority when it comes to the fair labor standards act they can't do that kind of stuff anymore what business owner is going to complain about that I'm not saying that that doesn't create other issues for employees in the workplace and all that but it's business owner it's how how's that a bad thing for me well you know I'm I kind of agree with you more than you might think there I think a lot of these laws are real I hate to say it um but a lot of these laws are really aimed at large corporations and sometimes small businesses get caught in the crossfire and they're not the ones that really need to uh you know bear the brunt to this and that's that's really unfortunate but the other side of that is and I think this what is what John aens Meer was of small business majority was getting at some of these regulations are designed to protect small businesses from large corporations and his concern and I think he may be right about this is that this may make that more difficult and you know an example of that might be um regulation on a Marketplace like Amazon and how it treats uh small Merchants that sell in that Marketplace um whether or not it should be allowed to to rip off their products or you know do the other things that Amazon has been accused of doing I guess there's some examples of that then there are some examples of not I mean getting back to the one you know like the overtime rule for example I don't see how that benefits small businesses you know I mean if you're forced to pay people overtime I mean if your larger counterparts are already doing that anyway because they can afford it why am I being forced to do it it's not it's not helping me you know um and it does get back to that Marketplace um issue saying you know why why aren't we letting businesses determining their own how they compensate their employees whether it's minimum wage overtime you know pay time off I mean you're running a business you know it's it's not the final thing is is that and this is some people believe that it's a it's a federalist point of view should the federal government be involved in this at all you know if you want to have rules regarding you know you overtime pay for example should that be a state thing or a federal thing like how much Authority should the federal government have and how much should be left to the stat who theoretically know their own locals you know um that's the questions that it raises well you know you can go back in time and look at what the world looked like before some of these laws existed um child labor laws for example and get a sense of where we might be if this were all completely thrown out and we just operated by the marketplace um I don't know I I don't have I don't have a lot of hopes for for that world I think the point that you bring up is good but it's a um there's just checks and balances that need to happen obviously things like extremes like child labor how about safety rules I mean yeah you know do you do you think we should abolish OSHA I don't think anybody's saying that we're we should be abolishing these agents well you came close to saying it there I mean not not that you said it literally but your the implication of what you were saying of let the marketplace determine kind of said it well I think it should be you know and I I'll I'll throw in the government Marketplace part of this I think that legislation needs to drive what businesses do legislation not rules that are made up um by whatever political person is in office at any given time so to use OSHA as an example just you know or no let's use the overtime rule as an example um if if you know if the people feel if Congress believes that overtime rules should be you know overtime pay should be increased or there needs to be a formula for it there should be a law to do that and then it's you know it's cut and dry that's just what the law is but what what they're doing right now is they're leaving it up to a a political arm which is what these agencies are depending on who's in office uh to determine uh what these rules are and you know I I I think the ruling from the Supreme Court is basically saying got to be law it's got to be law you know I understand the appeal of that the trick there is that you said before that you need maybe this will encourage better writing of regulations maybe what we really need is better writing of law but that's a problem because you can't foresee every possibility especially over time uh laws tend to stay in the books for a very long period of time the world changes and somebody has to do that interpretation and I still would rather have a room full of experts who've dedicated their careers to a particular topic and and I understand you're right there is political influence in that world as well uh than a judge let me ask you this um does it bother you at all that two of the justices on the Supreme Court who voted with a majority on this have taken millions of dollars in undisclosed gifts from the kinds of people who supported and brought this leg litigation yeah it Bo it does bother me um and I I you know it what bothers me the most is the lack of judgment by somebody sitting on the Supreme Court that would that would do something like that um when people that you put in a in a position of trust uh behav in that way it really does call him to question whether or not you can believe any anything they do um but I will I will say that the Supreme Court themselves because they they've ruled just in the past few weeks on on quite a few different cases that were in favor of the Biden Administration that were against what you know some of the Republicans wanted and the Supreme Court itself I mean I think you do take your job seriously when you're Supreme Court Justice I think you are trying to evaluate each case as it as it relates to the Constitution I do think they're professionals but I do have to admit there Lauren man when I see them doing stuff like that um it just it it burns me up it really does we agree on something else Jean what are you working on anything we should look for this week yeah what am I writing this week aluren um I am G to write about the chevron case for the inquire um and a lot of it's gonna be part of what your you know what this conversation was all about you know so that's going to be my feel free to quote me yeah should I quote you on this is I like to to get you invol I will try you know it's more of an advice case and it's more like what do you do I mean the the I'm going to use that overtime ruling as an example because in all of this all these conversations that we're having about this you know Lauren it's all fine from an academic level but come on man you're running a business you're like all right so what the do I do you know what I mean like this thing is out there you know now all these rules are in play do I follow the rules do I not what rule is is effective what's I mean I have I have clients right now that are like these overtime rules go to affect today you know sure but now I'm hearing that you know this case in Texas is going to stop St them um and now it's bolstered by the Supreme Court decision so should I even be like comping what do I do that gets back to John's you know John arens me's you know it creates uncertainty it really does and that's so I'm G to try and offer some some thoughts I talked to a couple of attorneys as to what to do um you know and you know that that's what I'll be writing about cool I will look forward to that Gan marks is a CPA who writes weekly on small business for the guardian the hill the Philadelphia inquire the Washington Times the Chicago Daily Herald Forbes and entrepreneur you can also hear him on ABC radio's eye on the world with John Bachelor Jean hosts two small business podcasts with payex Corporation and the Hartford this episode was brought to you by the great game of business which helps businesses use an open book management system to help build healthier companies you can learn more at Great game.com thank you Jean thank you Lauren talk to you soon have a great week everybody [Music]