On the subject of federal time beyond regulation regulation, the previous decade has entailed a sure diploma of whiplash for employers.
First got here the U.S. Division of Labor’s Obama-era time beyond regulation rule, which tried to lift the minimal wage threshold for time beyond regulation underneath the Truthful Labor Requirements Act to $47,476 per yr — a rule struck down Nov. 22, 2016, simply days earlier than it was set to take impact. That stored the time beyond regulation threshold at $23,660. Then, in 2019, DOL introduced a rule that set the edge at $35,568 — a rule that did take impact the next January.
DOL finalized yet one more change underneath the Biden administration: The two-prong 2024 rule, which raised the edge to $43,888 on July 1 and would have raised it to $58,656 on January 1. However simply days in the past, U.S. District Court docket Decide Sean Jordan vacated the rule, setting the time beyond regulation threshold again to the usual set through the Trump administration: $35,568.
With the administration altering events once more, what do employers have to learn about how DOL will proceed? And what ought to they do concerning the adjustments they made to arrange for the now-reversed change in July?
Rule is probably going ‘lifeless’
Whereas DOL has the correct to enchantment the choice — and will but accomplish that — the result is unlikely to vary for a lot of causes, Brett Coburn, accomplice at Alston & Chicken, informed HR Dive.
For one, the fifth U.S. Circuit Court docket of Appeals, the place such an enchantment would land, is the “most conservative circuit,” he stated, possible making for a unsympathetic listening to. Whereas the fifth Circuit just lately upheld DOL’s use of a wage foundation check to find out pay eligibility, that doesn’t imply it might be more likely to reverse on this case, Coburn added.
Moreover, as DOL adjustments palms to an incoming Trump administration, the company would virtually definitely withdraw any enchantment filed through the lame duck interval.
Employers can “assume the rule is lifeless, however hold your ear to the bottom,” Coburn stated.
What about that July adjustment?
Whereas the rule could now be lifeless, many employers made classification or wage adjustments to adjust to DOL’s elevating of the edge in July (with a minimum of one exception: the Texas state authorities). What ought to they do about these raises or reclassifications?
In all probability little or no, each Coburn and Chuck McDonald, co-chair of wage and hour apply at Ogletree Deakins, informed HR Dive.
Theoretically, an employer that raised employees’ salaries to maintain them exempt from the time beyond regulation rule might decrease these salaries again down, however purely from an worker relations standpoint, McDonald stated, the strategy wouldn’t be advisable.
Coburn additionally cautioned towards dropping employees’ nonexempt standing too rapidly or with out cautious consideration.
“People who find themselves on this [salary] vary … are the people who find themselves in a grey space as as to if their duties are exempt or not,” he stated, referencing the assorted job necessities employees should meet — along with the wage foundation — to be exempt from time beyond regulation pay. The duties check generally is a trickier course of to navigate for employers.
Provided that such employees “will not be comfortably exempt from a duties perspective,” reclassifying them a second time might doubtlessly immediate them to speak to a lawyer, Coburn stated. “You could, by making an attempt to save lots of somewhat bit, be inviting litigation.”
Managing January plans
Outdoors of ordinary annual wage changes, employers can comfortably shelve their plans to reclassify workers or change salaries come January, the attorneys stated.
Given the rule was vacated a month and a half forward of time — slightly than per week, as in 2016 — organizations had been possible extra ready for this end result than a few of the different choices handed down this yr.
“It’s not just like the FTC noncompete rule,” Coburn stated, “the place individuals had been ready with bated breath.” (That rule was struck down Aug. 20, simply two weeks from when it was set to take impact.)
“Most of what I’ve heard is: ‘We’re glad we’ve heard it sooner slightly than later,’” McDonald stated.
Whereas employers are possible relieved, Coburn famous one down facet: The January change could have been a helpful means for employers to evaluation and make some classification adjustments that wanted to occur regardless.
“You don’t get quite a lot of alternatives to make adjustments with out inviting questions,” he stated. “This may have supplied some clarification.”
