In May of 2016, the Department of Labor issued a final rule updating the federal overtime regulations. This update would have increased the minimum salary for exempt employees to $913 per week, or $47,476 annually as of December 1, 2016. Businesses had to decide to either increase salaries for affected individuals or change them to non-exempt and eligible for overtime in order to be compliant with the final rule.
Twenty-one states and dozens of business groups filed lawsuits against the Federal Government and won, claiming increased costs could potentially lead to layoffs and business closures. A Texas court blocked this new rule just days before it went into effect, causing many businesses who were already implementing the changes to be in a precarious situation of either continuing changes or having to explain to employees why they were being reverted back to their previous status.
It has been more than six months since the ruling was blocked, and many are asking, “Where do we stand on this issue now?” This ruling is still being held up, leaving many employers in limbo. On June 26, 2017, U.S. Labor Secretary Acosta stated he will be asking “for more input” on the ruling, yet there is no time frame or further discussion available. However, some employers are leveraging the unknown time frame through employee engagement to be proactive with salary increases in the wake of unknown Federal changes.
Several states have taken matters into their own hands, such as California, New York, and Iowa. California has bumped their minimum salary to $840 per week. New York has instituted a minimum salary range of $727.50 – $825 per week, depending on employer size and location. Iowa has also increased their white-collar exemption to $500 per week. Other states, such as Kentucky, who follow the current Federal minimum of $455, have taken no action.
Keeping up-to-date on Federal and State changes is important and Sheakley is here to help. But the bottom line of any discussion is not to focus on the negatives of court rulings past, present, or future. Each employer must justify a decision to treat an employee as exempt/non-exempt based on their individual circumstances alongside the law.
One way to help mediate salary expectations is to engage employees through various means to bring intrinsic value to your company beyond salary and build productive long term relationships. Employee recognition can go a long way toward strengthening relationships beyond the necessity of minimum salary legislation. If you would like to discuss minimum salary legislation, or avenues toward employee engagement, please contact your HR Team Member.