Relating to federal extra time 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 extra time rule, which tried to lift the minimal wage threshold for extra time 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 saved the extra 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 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 Courtroom Choose Sean Jordan vacated the rule, setting the extra time threshold again to the usual set through the Trump administration: $35,568.
With the administration altering events once more, what do employers must learn about how DOL will proceed? And what ought to they do in regards to the modifications they made to arrange for the now-reversed change in July?
Rule is probably going ‘useless’
Whereas DOL has the appropriate to attraction the choice — and will but accomplish that — the result is unlikely to alter for plenty of causes, Brett Coburn, associate at Alston & Chicken, 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 mentioned, doubtless making for a unsympathetic listening to. Whereas the fifth Circuit just lately upheld DOL’s use of a wage foundation take a look at to find out pay eligibility, that doesn’t imply it might be prone to reverse on this case, Coburn added.
Moreover, as DOL modifications fingers to an incoming Trump administration, the company would nearly actually withdraw any attraction filed through the lame duck interval.
Employers can “assume the rule is useless, however preserve your ear to the bottom,” Coburn mentioned.
What about that July adjustment?
Whereas the rule could now be useless, many employers made classification or wage modifications to adjust to DOL’s elevating of the edge in July (with no less than one exception: the Texas state authorities). What ought to they do about these raises or reclassifications?
Most likely little or no, each Coburn and Chuck McDonald, co-chair of wage and hour observe at Ogletree Deakins, informed HR Dive.
Theoretically, an employer that raised employees’ salaries to maintain them exempt from the extra time rule may decrease these salaries again down, however purely from an worker relations standpoint, McDonald mentioned, 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 if their duties are exempt or not,” he mentioned, referencing the varied job necessities employees should meet — along with the wage foundation — to be exempt from extra time pay. The duties take a look at is usually a trickier course of to navigate for employers.
On condition that such employees “will not be comfortably exempt from a duties perspective,” reclassifying them a second time may probably immediate them to speak to a lawyer, Coburn mentioned. “Chances are 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 workers or change salaries come January, the attorneys mentioned.
Given the rule was vacated a month and a half forward of time — moderately than per week, as in 2016 — organizations have been doubtless extra ready for this end result than a few of the different selections handed down this yr.
“It’s not just like the FTC noncompete rule,” Coburn mentioned, “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 moderately than later,’” McDonald mentioned.
Whereas employers are doubtless relieved, Coburn famous one down aspect: The January change could have been a helpful means for employers to assessment and make some classification modifications that wanted to occur regardless.
“You don’t get a variety of alternatives to make modifications with out inviting questions,” he mentioned. “This might have supplied some rationalization.”
