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Blog: Blog2

Mother Nature Scorches the Earth, Blind Justice Torches the Rule Book. How Can You Manage?

Updated: Jul 11

Heat waves cause the work pace to drop as temperatures and humidity rise, contributing to the slowdown in LBM's pace these days. But it hasn't slowed action in the courts, where federal judges have been busy blocking rules on non-competes and overtime pay from taking effect. Expect challenges as well over new OSHA rules for working in the heat. A recent Supreme Court decision is expected to prompt even more court battles over rules that have been in effect a long time.

Between the heat and the court rulings, construction supply leaders face several management challenges. How should they protect employees operating in triple-digit temps? How can they write rulebooks when what's legal keeps changing? And how can they Do What's Right in an age when Americans disagree so profoundly--and are willing to challenge practices they dislike? What happened at Tractor Supply is an example.

This summer's unusually long heat waves follow a spring in which builders have told Zonda that demand was slower than expected--worryingly slow, according to a quarter of those surveyed. Monthly revenues posted by building material and supplies dealers in the Census Bureau's monthly retail sales report haven't topped their year-earlier figures since January 2023. And Cowen reports an 11-point rise, to 61%, in the share of surveyed people making over $100,000 who said they planned to cut spending in certain areas. (Home improvement was way down the cutback list, however.)

Amid the heat wave, OSHA proposed a new rule that affects employees working indoor as well as outdoors and creates triggers when the heat index reaches 80 and then 90 degrees. For instance, once the heat index tops 90, employees need to provide a 15-minute rest break every two hours. Here's part of the fact sheet from the proposed rule:

Some dealers and manufacturers might have such standards in effect already, but odds are that someone will file a lawsuit challenging the reg. And, thanks to a Supreme Court decision last month, the challengers' chances of succeeding will rise.

The reason why relates to something called "Chevron deference." It stems from a 1984 ruling involving Chevron in which the high court said judges should defer to federal agencies' interpretation and application of laws. But in late June, the Supreme Court overturned Chevron deference in a case involving herring fishermen. The decision gives judges more authority to decide whether a federal agency is interpreting a law properly when the agency writes rules implementing that law.

Legal experts predict a wave of lawsuits from business groups and conservative think tanks taking on decades of existing rules. These will come on top of challenges against rules that had yet to take effect.

On July 3, a U.S. District Court judge in Texas blocked the Federal Trade Commission from enforcing its recent rule banning virtually all non-compete agreements. Plaintiffs had argued that the FTC lacked statutory authority to ban non-competes simply by issuing a rule. And in late June, a federal judge--also in Texas--issued a temporary restraining order blocking the Department of Labor's overtime rule. That decision applied only to Texas state employees, but it could be extended to all workers nationwide.

One implication from the Supreme Court's abandonment of the Chevron deference is that Congress needs to write more detailed laws. But it can take years--decades, even--for a law to emerge from Capitol Hill, and with the current gridlock it's harder than ever to get Congress to write anything. As a result, federal agencies have gotten creative interpreting existing statutes. Those days may be over.

Given this uncertainty, construction supply executives need to make their own decisions regarding what's right, sometimes in response to private groups or public movements. But that's a challenge, too, considering the marked differences in Americans on key issues. A February Gallup poll shows the gap. The percentages show those who gave high satisfaction scores to an issue.

Tractor Supply was caught in such a split recently when a conservative social media influencer launched a campaign against the company's Diversity, Equity, and Inclusion (DEI) policies. That's a common but also controversial initiative at public companies, and it's an effort Tractor Supply cited when it received awards for its DEI work. But after about three weeks of pressure, Tractor Supply closed its DEI office and gave up its carbon reduction initiatives (see story).

"We work hard to live up to our Mission and Values every day and represent the values of the communities and customers we serve," the company said in a statement. "We have heard from customers that we have disappointed them. We have taken this feedback to heart."

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