'Back off': Texas restaurateur fights Labor Department's new overtime rules

Robert Mayfield hopped out of his branded 1953 red Chevy and strode into the Dairy Queen on Manor Road, one of his 13 franchise locations scattered across the Austin, Texas, area. Inside, he twirled the tip of a vanilla soft serve cone into a loop, then held it up to his face, peering through the "eye of the curl," as he called it.

Mayfield's father gave up life as a struggling cowboy and opened the family's first Dairy Queen in the late 1940s. Now, the younger Mayfield is lauded as the "King of Queens" by the Austin-American Statesman.

And the King is taking on the federal government, accusing the Department of Labor of overstepping its authority by unilaterally raising the minimum salary employees must be paid to be exempt from overtime pay.

"It's a bad deal," Mayfield told Fox News Digital. "Anybody that believed that was a good idea doesn't own their own business."

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Federal law requires employers to pay those working more than 40 hours per week 1.5 times their normal rate for the excess hours. But salaried workers with "executive, administrative or professional" duties are exempt from the overtime requirements.

Since 1938, the Department of Labor has also used workers' salaries to determine whether they are overtime eligible. The minimum salary held steady at $23,660 for more than 15 years. In 2020, the Trump administration bumped it up to $35,568 per year.

The Biden-Harris administration finalized another set of increases earlier this year. The first took effect July 1, raising the salary threshold to $43,888. The cap will again rise on Jan. 1, this time to $58,656, extending overtime to an estimated 4 million workers.

"Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable," Acting Secretary of Labor Julie Su said in a statement announcing the increase.

Mayfield has been locked in a battle with the Department of Labor for the last two years, suing for the right to offer his managers the compensation packages he sees fit. His lawyers at the nonprofit Pacific Legal Foundation argue any rule imposing a salary requirement exceeds the department's authority and violates the non-delegation doctrine, the principle that Congress cannot relinquish its lawmaking ability to other entities.

"This is free enterprise," Mayfield said, arguing that he should be able to set the wages that work for his business and "if people don't like it, they go somewhere else."

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Mayfield pays his hourly employees starting rates of $15 per hour, well above state and federal minimum wages. Managers get compensation packages that include bonus opportunities if their restaurants perform well, incentivizing high performance, he said.

"Managers don't even look at the hours. They get a job done. If they make profits, then they get the bonus," he said. "It's the closest thing you can get to owning your own business."

His strategy appears to be paying off. Thousands of fast-food joints line the roads across the Lone Star State, but in Austin, Mayfield Dairy Queens stand apart from the rest. Customers often describe their first trip to a Mayfield DQ with a sense of wonder or pleasant bafflement.

The restaurants are clean, the service is fast and, above all, the employees are "cheerful to the point that I was confused the first time I went," as one Reddit commenter put it. 

"We're able to grow so well because, like any other successful business, we treat our people right," Mayfield said. "We pay them good money. We like 'em."

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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 "link between the job duties identified and salary is strong." But the justices added that the Labor Department's "power is not unbounded."

"That does not mean… that use of a proxy characteristic will always be a permissible exercise of the power to define and delimit," the panel's opinion reads.

The Jan. 1 rule change will require Mayfield to either raise salaries for nearly two thirds of his currently-exempt management team, or switch them to an hourly pay structure, according to court filings. He says it will be burdensome for managerial staff, who will now have to document their time, and will likely cut into the 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 'em to back off… if they know anything or care about that small business."

Some Congressional Democrats have asked DOL to go even further, raising the threshold to the 55th percentile of salaried workers' earnings. That number would be at least $82,732 by 2026, according to a 2021 letter from Rep. Mark Takano, D-Calif., 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 that if Congress wants a higher salary floor, they need to pass it themselves, rather than give DOL a "blank check."

"We have a fundamental breakdown in separation of powers," Wake told Fox News Digital. "Congress should be writing the law, not the secretary of labor."

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Mayfield's lawyers are now petitioning the entire 5th Circuit to decide the case. If they decline — or reach the same conclusion as the panel — it's possible the case could be appealed to the Supreme Court.

Wake said the high court has already shown a keen interest in separation of powers, particularly given its seismic Chevron ruling in June, which rolled back a 40-year doctrine that gave federal regulatory agencies broad power to interpret the laws they administered. 

"If you really want to stop the growth of the administrative state, reinvigorating the non-delegation doctrine is the next major battle," Wake said. "And that's what this case is about."

A federal judge temporarily blocked the rule from being applied to Texas state employees in June after a challenge by the Republican-led state.