In relation to federal extra 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 extra time rule, which tried to boost the minimal wage threshold for extra 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 saved the extra time threshold at $23,660. Then, in 2019, DOL introduced a rule that set the brink 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 brink 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 Choose Sean Jordan vacated the rule, setting the extra time threshold again to the usual set throughout 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 adjustments they made to organize for the now-reversed change in July?
Rule is probably going ‘useless’
Whereas DOL has the proper to attraction the choice — and will but achieve this — the end result is unlikely to vary for a variety of causes, Brett Coburn, associate at Alston & Chicken, informed HR Dive.
For one, the fifth U.S. Circuit Court docket of Appeals, the place such an attraction would land, is the “most conservative circuit,” he mentioned, probably 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 prone to reverse on this case, Coburn added.
Moreover, as DOL adjustments fingers 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 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 adjustments to adjust to DOL’s elevating of the brink 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 observe at Ogletree Deakins, informed HR Dive.
Theoretically, an employer that raised employees’ salaries to maintain them exempt from the extra time rule might decrease these salaries again down, however purely from an worker relations standpoint, McDonald mentioned, the method 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 mentioned, referencing the assorted job necessities employees should meet — along with the wage foundation — to be exempt from extra time pay. The duties check generally is 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 might probably immediate them to speak to a lawyer, Coburn mentioned. “It’s possible you’ll, by making an attempt to avoid wasting a bit of 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 mentioned.
Given the rule was vacated a month and a half forward of time — quite than per week, as in 2016 — organizations had been probably extra ready for this consequence than among the different selections handed down this 12 months.
“It’s not just like the FTC noncompete rule,” Coburn mentioned, “the place folks 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 probably relieved, Coburn famous one down aspect: The January change could have been a helpful approach for employers to evaluate and make some classification adjustments that wanted to occur regardless.
“You don’t get a variety of alternatives to make adjustments with out inviting questions,” he mentioned. “This might have offered some clarification.”