Biden overtime pay rule challenged by US business groups

 

Boeing (BA.N)

, opens a new tab said on Thursday the planemaker has updated its workforce training for new hires for manufacturing and quality after pausing it in late February.

Its new hires will now receive 10 to 14 weeks of foundational skills training before moving to the production floor, which is one to two weeks more on average per employee than in the past.

At its Renton training center, Boeing has installed a section of 737 fuselage for employees to practice skills such as wiring installation and identifying potential defects.

Following the Alaska Airlines incident on Jan.5 when a door panel of a 737 MAX 9 detached during a flight, the company is overhauling manufacturing practices as it grapples with investigations and slumping production of its strongest-selling jet.

HSBC's (HSBA.L), opens new tab employee attendance has jumped to 80% at its new office in New York's Hudson Yards area, said Michael Roberts, CEO of HSBC in the USA and the Americas, on Thursday.

Attendance was 40% before the pandemic at its former base in Bryant Park, Roberts said at an opening ceremony for the site. New York Mayor Eric Adams and former mayor Michael Bloomberg also spoke at the event.

The lender started to relocate staff to the new office in February and will move traders, the last group, in June.

HSBC's hybrid working policy has been among the most flexible in the financial industry.

HSBC's new office has open working spaces overlooking the Hudson River. It includes perks like a coffee bar, wellness center, and a combination of private and shared spaces to tempt workers back.

The company held a "chair fair," asking employees to weigh in on their favorite furniture, and a "workspace fair" for traders to choose their desk configurations, Mabel Rius, the bank's head of human resources in the U.S., told reporters.

The office's massage chair is particularly popular, she said.

  A coalition of U.S. business groups has filed a lawsuit seeking to block a Biden administration rule that would extend mandatory overtime pay to 4 million workers, saying it goes too far.

The groups filed a complaint in Sherman, Texas federal court late on Wednesday claiming the U.S. Department of Labor lacked the power to adopt the rule and that it would force businesses to cut jobs and limit workers' hours.

The rule would require employers to pay overtime premiums to workers who earn a salary of less than $1,128 per week, or about $58,600 per year when they work more than 40 hours in a week.

The current threshold of about $35,500 per year was set by the Trump administration in a 2020 rule that advocacy groups and many Democrats have said does not cover enough workers.

The business groups in the lawsuit said the costs of complying with the new rule "will force many smaller employers and non-profits operating on fixed budgets to cut critical programming, staffing, and services to the public."

The Labor Department declined to comment. In adopting the rule, the agency said that lower-paid salaried workers often do the same jobs as their hourly counterparts, but work more hours for no additional pay.

The groups involved in the lawsuit include the National Federation of Independent Business, the International Franchise Association, and the National Retail Federation.

The case was assigned to U.S. District Judge Sean Jordan, an appointee of Republican former President Donald Trump.

The only other judge in Sherman, U.S. District Judge Amos Mazzant, in 2017 blocked a rule that would have raised the overtime salary threshold to about $47,000.

Mazzant said the cutoff was so high that it would sweep in some management employees who are not entitled to overtime pay under federal wage law.

"The Department’s 2024 Overtime Rule largely repeats the errors of the 2016 Rule and fails to address the flaws previously identified by this Court," the business groups said in their lawsuit.

Under the new rule, the salary threshold will increase to $43,888 on July 1 and to $58,656 on Jan. 1, 2025. Starting in 2027, the threshold will automatically increase every three years to reflect changes in average earnings.

The U.S. Justice Department and more than two dozen states on Thursday sued to break up Live Nation (LYV.N), opening a new tab, arguing the big concert promoter and its Ticketmaster unit illegally inflated concert ticket prices and hurt artists.

"It is time to break up Live Nation,” said U.S. Attorney General Merrick Garland.

Concert fans and politicians for years have been calling for a re-examination of Live Nation's purchase of Ticketmaster in 2010, especially after the ticket seller in 2022 botched sales to Taylor Swift's first concert tour in years, sending fans into hours-long online queues, charging prices that customers said were too high and drawing charges of poor service.

Thursday's legal action underscores the aggressive approach President Joe Biden's antitrust enforcers have adopted as they seek to create more competition in a wide range of industries, from Big Tech to healthcare to groceries.

Live Nation "suffocates its competition," said Garland, who quoted a Swift song during the lawsuit press conference. It relies on "unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters, and venue operators,” Garland said, adding that as a result fans pay more in fees, artists have fewer opportunities to perform and smaller promoters get squeezed out.

Shares of Live Nation were down 8.3% on Thursday afternoon.

In the lawsuit, the Justice Department and states asked the court to “order the divestiture of, at minimum, Ticketmaster, along with any additional relief as needed to cure any anticompetitive harm.”

Live Nation called the lawsuit a possible "PR win for the DOJ in the short term," but said the entertainment company would prevail in court. The lawsuit "won't solve the issues fans care about relating to ticket prices, service fees, and access to in-demand shows."

Item 1 of 6 Concert goers listen as the Rolling Stones perform during the kick-off show of their "No Filter" tour at Soldier Field in Chicago, Illinois, U.S. June 21. REUTERS/Daniel Acker/File Photo

[1/6]Concert goers listen as the Rolling Stones perform during the kick-off show of their "No Filter" tour at Soldier Field in Chicago, Illinois, U.S. June 21. REUTERS/Daniel Acker/File Photo Purchase Licensing Rights, opens a new tab

"There is more competition than ever in the live events market," it added.

Wall Street firm Guggenheim Partners, which has a "buy" rating on the stock, called the DOJ case "weak" and "purely politics in an election year to win over voters."

The lawsuit says Live Nation directly manages more than 400 musical artists and controls around 60% of concert promotions at major venues. It owns or controls more than 265 concert venues in North America, and through Ticketmaster controls roughly 80% or more of big venues’ primary ticketing for concerts.

In a filing in the Southern District of New York, the DOJ argued the "vast scope" of Live Nation and Ticketmaster allowed them to "insert themselves at the center and the edges of virtually every aspect of the live music ecosystem."

Democratic Senator Amy Klobuchar welcomed the lawsuit, noting the "live event entertainment experience has become increasingly out of reach for many Americans." She added that Congress should take action and pass her legislation to create "guard rails to promote healthy competition in the ticketing market."

A bipartisan group of attorneys general including from New York, California, Florida, and Texas joined the DOJ's lawsuit.

In 2010, the Justice Department approved Ticketmaster's controversial merger with Live Nation, with conditions intended to stop the combined company from harming competition.

In 2020, a court extended most of the DOJ's oversight of the merger to 2025 because, the department said, Ticketmaster retaliated against stadiums and arenas that opted to use other ticketing companies.

The Justice Department said its prior case against Live Nation “tried to protect what should be a dynamic, thriving industry." The government alleged Live Nation has shown since then “additional, different, and more expansive forms of anticompetitive conduct and exclusionary practices.”

The NCAA and the nation’s five biggest conferences announced Thursday night that they have agreed to pay nearly $2.8 billion to settle a host of antitrust claims, a monumental decision that sets the stage for a groundbreaking revenue-sharing model that could start steering millions of dollars directly to athletes as soon as the 2025 fall semester.

NCAA President Charlie Baker along with the commissioners of the Atlantic Coast Conference, Big Ten, Big 12, Pac-12, and Southeastern Conference released a joint statement saying they had agreed to settlement terms. They called the move “an important step in the continuing reform of college sports that will provide benefits to student-athletes and provide clarity in college athletics across all divisions for years to come.”

Terms were not disclosed, though some details have emerged in the past few weeks. They signal the end of the NCAA’s bedrock amateurism model that dates to its founding in 1906. Indeed, the days of NCAA punishment for athletes driving booster-provided cars started vanishing three years ago when the organization lifted restrictions on endorsement deals backed by so-called name, image, and likeness money.

The deal still must be approved by the federal judge overseeing the case and plaintiffs will have the opportunity to opt out or challenge the terms of the agreement. If it stands, it will usher in the beginning of a new era in college sports where athletes are compensated more like professionals and schools can compete for talent using direct payments.

“There’s no question about it. It’s a huge quantum leap,” said Tom McMillen, the former Maryland basketball player and congressman who has led an association of collegiate athletic directors for the past eight years.

Now it is not far-fetched to look ahead to seasons where star quarterbacks or top prospects on college basketball teams are not only cashing in big-money NIL deals but have six-figure school payments in the bank to play.

“This landmark settlement will bring college sports into the 21st century, with college athletes finally able to receive a fair share of the billions of dollars of revenue that they generate for their schools,” said Steve Berman, one of the lead attorneys for the plaintiffs. “Our clients are the bedrock of the NCAA’s multibillion-dollar business and finally can be compensated in an equitable and just manner for their extraordinary athletic talents.”

There are a host of details still to be determined, but the agreement calls for the NCAA and the conferences to pay $2.77 billion over 10 years to more than 14,000 former and current college athletes who say now-defunct rules prevented them from earning money from endorsement and sponsorship deals dating to 2016.

“Even though it was only because of the overwhelming legal pressure, the NCAA, conferences, and schools are agreeing that college athletes should be paid,” said Ramogi Huma, a former UCLA football player and longtime advocate for college athletes. “And there’s no going back from there. That’s truly groundbreaking.”

Some of the money will come from NCAA reserve funds and insurance but even though the lawsuit specifically targeted five conferences that are comprised of 69 schools (including Notre Dame), dozens of other NCAA member schools will see smaller distributions from the NCAA to cover the mammoth payout.

Schools in the Big Ten, Big 12, ACC, and SEC are likely to end up bearing the brunt of the settlement going forward at an estimated cost of about $300 million each over 10 years, the majority of which would be paid directly to athletes.

“The settlement, though undesirable in many respects and promising only temporary stability, is necessary to avoid what would be the bankruptcy of college athletics,” said Notre Dame President Rev. John I. Jenkins.

PAYING ATHLETES

In the new compensation model, each school will be permitted but not required to set aside up to $21 million in revenue to share with athletes per year, though as revenues rise so could the cap.

Athletes in all sports would be eligible for payments and schools would be given the freedom to decide how that money is divvied up among sports programs. Scholarship limits by sport will be replaced by roster restrictions.

Whether the new compensation model is subject to the Title IX gender equity law is unknown along with whether schools will be able to bring NIL activities in-house as they hope and squeeze out the booster-run collectives that have sprouted up in the last few years to pay athletes. Both topics could lead to more lawsuits.

THE CASE

The class-action federal lawsuit at the center of the settlement, House v. the NCAA, was set to go to trial in January. The complaint, brought by former Arizona State swimmer Grant House and Sedona Prince, a former Oregon and current TCU basketball player, said the NCAA, along with the five wealthiest conferences, improperly barred athletes from earning endorsement money.

The suit also argued that athletes were entitled to a piece of the billions of dollars the NCAA and those conferences earn from media rights agreements with television networks.

Amid political and public pressure, and facing the prospect of another court loss that some in college sports claimed could reach $20 billion in damages, NCAA and conference officials conceded on what has long been a core principle of the enterprise: that schools don’t directly pay the athletes to play beyond a scholarship.

That principle has been dented numerous times over the last decade. Notably, the Supreme Court unanimously ruled against the NCAA in 2021 in a case related to education-related benefits.

The narrow focus of the Alston case didn’t collapse the collegiate sports system, but the strong rebuke of the NCAA’s model of amateurism flung the door open to more lawsuits. Justice Brett Kavanaugh, a former Yale athlete, put it bluntly: “The bottom line is that the NCAA and its member colleges are suppressing the pay of student-athletes who collectively generate billions of dollars in revenues for colleges every year.”

THE OTHER CASES

The settlement is expected to cover two other antitrust cases facing the NCAA and major conferences that challenge athlete compensation rules. Hubbard vs. the NCAA and Carter vs. the NCAA are also currently in front of judges in the Northern District of California.

A fourth case, Fontenot vs, NCAA, creates a potential complication as it remains in a Colorado court after a judge denied a request to combine it with Carter. Whether Fontenot becomes part of the settlement is unknown and it matters because the NCAA and its conferences don’t want to be on the hook for more damages should they lose in court.

“We’re going to continue to litigate our case in Colorado and look forward to hearing about the terms of a settlement proposal once they’re actually released and put in front of a court,” said George Zelcs, a plaintiffs’ attorney in Fontenot.

COLLEGE ATHLETICS OVERHAUL

The solution agreed to in the settlement is landmark, but not surprising. College sports has been trending in this direction for years, with athletes receiving more and more monetary benefits and rights they say were long overdue.

In December, Baker, the former Massachusetts governor who has been on the job for 14 months, proposed creating a new tier of Division I athletics where the schools with the most resources would be required to pay at least half their athletes $30,000 per year. That suggestion, along with many other possibilities, remains under discussion.

The settlement does not make every issue facing college sports go away. There is still a question of whether athletes should be deemed employees of their schools, something Baker and other college sports leaders are fighting against.

Some type of federal legislation or antitrust exemption is likely still needed to codify the terms of the settlement, protect the NCAA from future litigation, and pre-empt state laws that attempt to neuter the organization’s authority. As it is, the NCAA is still facing lawsuits that challenge its ability to govern itself, including setting rules limiting multiple-time transfers.

“This settlement is also a road map for college sports leaders and Congress to ensure this uniquely American institution can continue to provide unmatched opportunity for millions of students,” the joint statement said. “All of Division I made today’s progress possible, and we all have work to do to implement the terms of the agreement as the legal process continues. We look forward to working with our various student-athlete leadership groups to write the next chapter of college sports.”

Federal lawmakers have indicated they would like to get something done, but while several bills have been introduced, none has gone anywhere.

Despite the unanswered questions, one thing is clear: Major college athletics is about to become more like professional sports than ever before.