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Dairy Queen restaurateur Robert Mayfield is suing the Department of Labor over overtime rules that he says would force him to cut bonuses and place managers back on hourly wages.
Robert Mayfield stepped out of his red 1953 Chevy and walked into the Dairy Queen on Manor Road, one of his thirteen franchise locations around the world. Austin area. Inside, he twisted the tip of a soft vanilla ice cream cone into a loop, then held it to his face and peered through the “eye of the curl,” as he called it.
Mayfield’s father gave up life as a wrestling cowboy and opened the family’s first Dairy Queen in the late 1940s. Now the younger Mayfield is hailed by Americans as the ‘King of Queens’ Austin-American statesman.
And the king is taking on the federal government, accusing the Ministry of Labor of overstepping its authority by unilaterally raising the minimum wage that workers must be paid to be exempt from overtime.
“It’s a bad deal,” Mayfield said Fox News digital. “Anyone who believed this was a good idea doesn’t have their own business.”
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Robert Mayfield holds a soft serve cone at the Dairy Queen on Manor Road in Austin, Texas on September 28, 2024. A second-generation franchisee, Mayfield owns 13 Dairy Queen restaurants that are regionally known for exceptional service. He attri (Fox News Digital / Fox News)
Federal law requires employers to pay those who work more than 40 hours per week 1.5 times their regular rate for the excess hours. But employees with “executive, administrative or professional” duties are exempt from the overtime requirements.
Since 1938, the Department of Labor has also used employees’ salaries to determine their eligibility for overtime pay. The minimum salary remained stable at $23,660 more than 15 years. In 2020, the Trump administration increased this to $35,568 per year.
The Biden-Harris administration another series of increases completed earlier this year. The first went into effect on July 1, raising the salary threshold to $43,888. The limit will rise again on January 1, this time to $58,656, expanding overtime coverage to an estimated 4 million workers.
“Too often, lower-paid workers do the same work as their counterparts, but spend more time away from their families without additional pay. That is unacceptable,” Acting Labor Secretary Julie Su said in a statement announcing the increase. .
Mayfield has been embroiled in a battle with the Department of Labor for the past two years, suing for the right to offer his managers the compensation packages he deems appropriate. Are attorneys at the nonprofit Pacific Legal Foundation argue that any rule imposing a salary requirement exceeds the department’s authority and violates the nondelegation doctrine, the principle that Congress cannot delegate its legislative power to other entities.
“This is free enterprise,” Mayfield said, arguing that he should be able to set the wages that work for his company and “if people don’t like it, they’ll go somewhere else.”
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Robert Mayfield says offering lower salaries to managers allows for bigger bonuses tied to company profits, which encourages high performance. (Fox News Digital / Fox News)
Mayfield pays its hourly employees at a starting rate of $15 per hour, well above the state and federal minimum wage. Managers receive compensation packages with bonus opportunities if their restaurants perform well, which encourages high performance, he said.
“Managers don’t even look at the hours. They get a job done. If they make a profit, they get the bonus,” he said. “It’s the closest thing we have to having your own business.”
His strategy appears to be paying off. Thousands of fast food chains line the roadways in the Lone Star State, but in Austin, Mayfield Dairy Queens stands out from the rest. Customers often describe their first trip to a Mayfield DQ with a sense of wonder or pleasant bewilderment.
The restaurants are clean, the service is fast and above all the employees are “so cheerful that I got confused the first time I went there”, as one Reddit commenter said it.
“We’re able to grow so well because, like any other successful company, we treat our people well,” Mayfield said. ‘We pay them good money. We like them.’
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Robert Mayfield’s Dairy Queens chain in Austin, Texas is known for its exceptionally friendly service and happy employees. (Michael Nagle/Bloomberg/Getty Images/Getty Images)
Last month, a three-judge panel of the 5th U.S. Circuit Court of Appeals upheld a lower court’s ruling that sided with the government, writing that “the connection between established duties and salary is strong.” But the justices added that the DOL’s “power is not limitless.”
“That does not mean… that the use of a proxy attribute will always be a permissible exercise of the power to define and delimit,” the panel’s judgment reads.
The Jan. 1 rule change requires Mayfield to either increase the salaries of nearly two-thirds of its currently exempt management team or switch them to an hourly wage structure, court documents show. He says it will be burdensome on management staff, who will now have to document their time, and will likely cut back on profits used to pay bonuses.
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“It’s going to hurt the people they say they’re going to help,” he said. “I would ask them to back off … if they know anything or care about that small business.”
Some Democrats in Congress have asked DOL to go even further and raise the threshold to the 55th percentile of workers’ earnings. That number would reach at least $82,732 by 2026, according to an American newspaper Letter from 2021 from Rep. Mark Takano and others. The lawmakers also called on DOL to implement automatic annual updates to “prevent erosion of the salary threshold over time.”
But Pacific Legal Foundation attorney Luke Wake said if Congress wants a higher salary floor, they should adopt it themselves, rather than giving DOL a “blank check.”
“We are dealing with a fundamental breakdown in the separation of powers,” Wake said Fox News digital. “Congress should write the law, not the Secretary of Labor.”
A three-judge panel of the 5th U.S. Circuit Court of Appeals ruled unanimously that the Labor Department can use employees’ salaries to determine their eligibility for overtime pay. (Fox News Digital / Fox News)
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Mayfield’s attorneys are now petitioning the entire 5th Circuit to rule on the case. If they refuse – or reach the same conclusion as the panel – the case could be appealed to the Supreme Court.
Wake said the Supreme Court has already shown great interest in the separation of powers, especially given its seismic implications Chevron pronunciation in June, a 40-year doctrine that gave federal regulators broad power to interpret the laws they enforce was reversed.
“If you really want to stop the growth of the administrative state, reviving the non-delegation doctrine is the next big battle,” Wake said. “And that’s what this case is about.”
A federal judge in June temporarily blocked the rule’s application to state employees in Texas after a challenge by the Republican-led state.