Earlier this year, a pair of new regulations were rolled out that would have required many agencies to change their employment practices.
The first was a Federal Trade Commission ruling that prohibited most noncompete agreements that agencies had with their employees, both past and present. That rule was blocked by a federal judge in August.
Now a different court has stopped new standards from the U.S. Department of Labor regarding the minimum salary that must be paid to workers to classify them as exempt from overtime pay.
Some agencies had already raised the salaries for their lowest paid employees when the salary threshold moved up to $44,000 on July 1. Many others expected to increase base pay or revise their overtime policies in advance of the planned jump to $58,600 on January 1.
Now this federal court ruling reverts the minimum salary for exempt classification to $35,500 – a number that allows most agencies to avoid overtime pay as long as their employees meet the other tests that look at the work they do.
What should agencies do now?
If you have already increased the salary of any employee, you shouldn’t look to cut it back. Doing so would be incredibly damaging to employee morale.
If you were already reviewing pay levels and overtime rules, take what you learned to decide how to proceed next. You may still want to increase some salaries to ensure you are offering competitive compensation.
As important, you want to be certain that your classification of employees is correct. Just because you are paying someone above the minimum salary doesn’t automatically mean that they are not eligible for overtime pay. They still must meet certain tests about the nature of their work.
What happens next?
With a new administration taking office in January, it is unlikely that these new overtime rules will come back in their current form.
It is likely that there will be future efforts to increase the salary threshold, but they will almost certainly need to start over from scratch.
