Reader: I wrote you before about the change in the Fair Labor Standards Act overtime regulations (June 26). To comply with the rule, my employer informed me that my annual salary would be adjusted to $24 above the new threshold, making me exempt from overtime pay. At the time, I was disappointed because the raise was not that significant and I regularly work more than 40 hours a week. However, I’ve begun feeling better about the situation and am hoping my employer will not renege now that a federal judge has put the rule temporarily on hold.
Karla: Thanks for the update. Looks like your employer was doing the bare minimum to comply — but it counts. And if you’re allowed to keep your raise, you’re still coming out ahead.
A recap for those who missed the news: Last spring, the Department of Labor announced a major rule change to make most workers earning less than $47,476 per year eligible for overtime as of Dec. 1. In response, some employers decided to raise wages to bring workers above the threshold (as with the reader above) or turn exempt workers into hourly workers and pay overtime as needed.
Then, just before Thanksgiving, a federal district court blocked the rule with a temporary injunction. On Dec. 1, the Labor Department filed for an expedited appeal against the injunction — but even with expedited review, the litigation is not likely to be resolved before the new administration takes over on Jan. 20.
Because the injunction came so late, many employers had already implemented the rule and were left grappling with whether they should undo the changes pending the outcome of the litigation.
And to add to the uncertainty, the incoming administration is not a fan of the change.
Although president-elect Trump hasn’t indicated his stance on the overtime rule, he has said small businesses should be exempt. His Labor Secretary appointee, fast-food restaurant chief executive Andrew Puzder, explicitly opposed the rule when it was announced, saying it would “add to the extensive regulatory maze … on employers” and result in “reduced opportunities, bonuses, benefits, perks and promotions.”
So in its current form, the embattled rule seems to have as much hope of survival as a New Year’s resolution during Mardi Gras.
But the fact remains that the current overtime threshold, which has been adjusted only once in four decades, has not kept pace with the cost of living. Even a modest increase in overtime benefits would indicate that the president-elect, who campaigned on bringing prosperity to “ people who work hard but don’t have a voice ,” intends to keep that promise.
Thanks to Nancy Hammer, Society for Human Resource Management, and Declan Leonard, Berenzweig Leonard.
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PRO TIP: What if you were promised a raise to comply with the regulations but your employer now says “Never mind”? In most cases, at-will employers can reduce your pay at any time, unless you were guaranteed a specific salary for a specific period.