Terry Shea opened a small gift boutique in Hoover, Ala., 11 years ago.
Four years later, at the height of the recession in 2009, Shea and her business partner, Sarah Brown, opened another store in the lively college town of Auburn, where their boutique, Wrapsody, has since become a community staple.
Now Shea worries that a newly proposed federal regulation could “suffocate” her ability to expand the business and provide valuable development opportunities for her employees.
Testifying before the House Small Business Committee Thursday, Shea said that the Department of Labor’s anticipated overtime rule threatens to “burden” her business with costly mandates, shrinking her ability to offer the range of benefits she currently provides to her staff.
The proposed changes to the Fair Labor Standards Act announced in July would more than double the overtime threshold from $23,660 to $50,400, extending overtime pay to an estimated 5 million workers across the U.S.
Republicans and business groups have adamantly pushed against the change, arguing it will lead to job cuts.
“We’re drowning these businesses in regulation,” Rep. Tom Rice, R-S.C., said during the hearing. “Between the Affordable Care Act, between the limit to access to capital under Dodd-Frank, all these things are well-intentioned, but they are significant constraints on small business.”
In the past five years, Rice noted, more small businesses have closed than have opened. He said this is a result of “huge regulatory overreach,” and the Labor Department’s proposal is “just more icing on the cake.”
Ross Eisenbrey, the vice president of the Economic Policy Institute, countered opposition, calling the regulation a “job-creating rule.”
“The National Retail Federation, who Shea is representing today, said that in their sector alone over 100,000 jobs would be added as a result of this rule,” he said.
Shea was unmoved.
If the new salary threshold takes effect as expected in 2016, Shea said she and her business partner will be forced to convert all salaried management to an hourly wage, requiring them to clock in and out.
Shea said this shift would reduce the flexibility of her workers to, for example, leave work early to attend a child’s dance class without worrying about making those hours up at a later time.
The potential cost of the rule, she continued, would diminish the resources she allots to sending her management team to educational retreats and networking events.
“This regulation just really puts us all in a cage and it just keeps [employees] from advancing,” Shea said. “Every dollar spent on compliance burdens is one less that we could have used to grow our business and invest further in our employees and community.”
