On the subject of federal additional 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 additional time rule, which tried to lift the minimal wage threshold for additional time beneath 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 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 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 have to learn about how DOL will proceed? And what ought to they do concerning the adjustments they made to organize for the now-reversed change in July?
Rule is probably going ‘lifeless’
Whereas DOL has the proper to attraction the choice — and will but accomplish that — the end result is unlikely to alter for quite a few causes, Brett Coburn, accomplice at Alston & Chook, 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 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 hold your ear to the bottom,” Coburn mentioned.
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 at the least 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 apply at Ogletree Deakins, informed HR Dive.
Theoretically, an employer that raised employees’ salaries to maintain them exempt from the additional time rule may decrease these salaries again down, however purely from an worker relations standpoint, McDonald mentioned, the method wouldn’t be advisable.
Coburn additionally cautioned in opposition to dropping employees’ nonexempt standing too shortly 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 mentioned, referencing the varied job necessities employees should meet — along with the wage foundation — to be exempt from additional time pay. The duties take a look at generally is a trickier course of to navigate for employers.
On condition that such employees “might 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 attempting to avoid wasting a little bit bit, be inviting litigation.”
Managing January plans
Outdoors 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 — quite than every week, as in 2016 — organizations had been doubtless extra ready for this consequence than a number of the different selections handed down this yr.
“It’s not just like the FTC noncompete rule,” Coburn mentioned, “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 quite than later,’” McDonald mentioned.
Whereas employers are doubtless relieved, Coburn famous one down aspect: The January change could have been a helpful method for employers to assessment and make some classification adjustments that wanted to occur regardless.
“You don’t get numerous alternatives to make adjustments with out inviting questions,” he mentioned. “This may have offered some rationalization.”