Less than two months before the effective date, a federal judge stopped an overtime ruling that would boost salary for “white collar” exemptions. The court ruled that the U.S. DOL exceeded its authority—not only did they raise the threshold too high, but they were also going to allow automatic adjustments every three years. It is expected that the DOL will most likely file an appeal; however, it’s hard to tell if the federal government will pick this legal battle back up.
What Happens Next?
For employers, moving forward after this block will depend on what you have already accomplished. Here are a few things to consider.
Have Changes Already Been Made?
Employers might be in a tough position if changes have already been made to their compensation plans and exemption statuses. Even though it’s legal to revert to old plans, it might not go over well with employees. Also, it might be too early to make such drastic changes because the DOL might make an appeal. Therefore, before making changes, be sure to clearly communicate with employees before taking effect. Additionally, if changes are made, some states require advanced notice of wage changes. So, more things to keep in mind.
Did You Plan to Wait Until the Deadline?
If you were planning to implement this wage change on January 1, you’re in luck. If you haven’t mentioned the potential increase, it’s best to stay silent. However, consider updating your workforce if you’ve already communicated the expected changes. Let them know the changes are delayed due to the court’s ruling, and reassure them that you’re closely monitoring the situation to make adjustments as needed.
Already Ready to Move Forward With the Changes?
If you’ve already adjusted your 2025 compensation plan to reflect these changes, you’re free to move forward and raise compensation levels starting January 1 (or any date you prefer). Remember, the salary threshold sets a minimum, and employers can always choose to pay exempt employees more. Additionally, since non-exempt status is the default, you have the option to keep any newly reclassified employees in that category. Just be sure to comply with all applicable federal, state, and local wage and hour laws for those workers.
What About a Hybrid Plan?
It’s hard to find something that works for everyone in the workforce. Thus, it’s fine to make a plan that varies depending on the work unit or job. The important thing is to be objective and consistent when applying changes—the last thing an employer wants is a discrimination claim.
Should Exemption Status be Reviewed?
With the amount of press this ruling is getting, a close examination of exemption status may be performed.
Is it Necessary To Reach Out to Legal Counsel?
Regarding the overtime changes, seeking legal counsel or guidance might be a good idea to help create and develop effective changes and communication within your organization.