In terms of federal additional time legislation, the previous decade has entailed a sure diploma of whiplash for employers.
First got here the U.S. Division of Labor’s Obama-era additional time rule, which tried to boost the minimal wage threshold for additional time beneath the Honest Labor Requirements Act to $47,476 per 12 months — a rule struck down Nov. 22, 2016, simply days earlier than it was set to take impact. That stored the additional time 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 beneath 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 Courtroom Decide Sean Jordan vacated the rule, setting the additional time threshold again to the usual set throughout the Trump administration: $35,568.
With the administration altering events once more, what do employers must find out about how DOL will proceed? And what ought to they do in regards to the adjustments they made to arrange for the now-reversed change in July?
Rule is probably going ‘lifeless’
Whereas DOL has the precise to attraction the choice — and should but achieve this — the result is unlikely to vary for various causes, Brett Coburn, associate at Alston & Hen, informed HR Dive.
For one, the fifth U.S. Circuit Courtroom of Appeals, the place such an attraction would land, is the “most conservative circuit,” he stated, doubtless making for a unsympathetic listening to. Whereas the fifth Circuit recently upheld DOL’s use of a wage foundation check to find out pay eligibility, that doesn’t imply it could be prone to reverse on this case, Coburn added.
Moreover, as DOL adjustments arms to an incoming Trump administration, the company would virtually actually withdraw any attraction filed throughout the lame duck interval.
Employers can “assume the rule is lifeless, however preserve your ear to the bottom,” Coburn stated.
What about that July adjustment?
Whereas the rule might now be lifeless, many employers made classification or wage adjustments to adjust to DOL’s elevating of the edge in July (with not less than one exception: the Texas state government). 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 follow at Ogletree Deakins, informed HR Dive.
Theoretically, an employer that raised employees’ salaries to maintain them exempt from the additional time 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 in opposition to 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 whether 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 additional time pay. The duties check is usually a trickier course of to navigate for employers.
Provided that such employees “might not be comfortably exempt from a duties perspective,” reclassifying them a second time might probably immediate them to speak to a lawyer, Coburn stated. “It’s possible you’ll, by making an attempt to avoid wasting a bit bit, be inviting litigation.”
Managing January plans
Exterior of normal annual wage changes, employers can comfortably shelve their plans to reclassify staff or change salaries come January, the attorneys stated.
Given the rule was vacated a month and a half forward of time — relatively than per week, as in 2016 — organizations have been doubtless extra ready for this final result than a number of the different choices handed down this 12 months.
“It’s not just like the FTC noncompete rule,” Coburn stated, “the place individuals have 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 relatively than later,’” McDonald stated.
Whereas employers are doubtless relieved, Coburn famous one down aspect: The January change might have been a helpful approach for employers to assessment and make some classification adjustments that wanted to occur regardless.
“You don’t get a number of alternatives to make adjustments with out inviting questions,” he stated. “This could have offered some clarification.”
