In the ever-evolving landscape of labor laws, staying compliant is crucial for business leaders. Recently, a significant development occurred when a Texas Federal Judge struck down the Department of Labor’s (DOL) new overtime rule nationwide. This ruling, announced on November 15, 2024, impacts the salary threshold increase that went into effect July 1, 2024, and, will impact the planned salary threshold increase set for January 1, 2025. As a result, the pre-existing salary thresholds remain in effect: $684 per week or $35,568 annually for white-collar exemptions (executive, administrative, and professional), and $107,432 annually for the Highly Compensated Employee (HCE) exemption.

Understanding the Current Landscape

With the DOL’s rule now deemed unlawful, employers must navigate the complexities of compliance amidst ongoing legal challenges. The possibility of an appeal by the DOL remains, with a deadline in mid-December 2024. Additionally, the new administration’s stance on this issue is uncertain, as differing opinions exist between white-collar and blue-collar groups.

What Employers Can Do Now

  1. Stay Informed: Continuously monitor updates regarding the DOL’s rule and any potential appeals. Understanding the current requirements for exemptions is essential to remain compliant.
  2. Conduct Self-Audits: Misclassification lawsuits are prevalent, making it crucial for employers to take preventative measures. Consider conducting a self-audit or seeking HR support services like those offered by HumCap to ensure compliance.
  3. Understand Exemption Requirements: Employers must prove an exemption, not the employee. This involves meeting the applicable salary threshold, and in addition, satisfying the job duties requirements.  Keep in mind that while two employees may have the same job title or role, the actual work that each employee performs will determine exemption. Understanding the different types of overtime (OT) exemptions under the Fair Labor Standards Act (FLSA) is paramount:
    • Executive Exemption
    • Administrative Exemption
    • Learned Professional Exemption
    • Outside Sales Exemption
    • Highly Compensated Employee Exemption
    • Computer Employee Exemption
  4. Review Salary Adjustments: If you’ve already adjusted salaries to meet the July 1, 2024 threshold, stay updated on developments. While rolling back salaries is uncommon and not advised, some employers are resetting thresholds for new hires as well as modifying job descriptions to more accurately align with the work being done.

How HumCap Can Help

At HumCap, we provide comprehensive HR solutions to help businesses navigate these changes. Our team of HR experts offer on demand, in-person or remote HR help and support services to ensure your organization remains compliant. From conducting audits to providing guidance on exemption requirements, we are here to support you every step of the way.

Watch Our Webinar for More Insights

To gain further insights into these developments, watch our recent webinar featuring Ron Chapman from Ogletree Deakins. The session provides practical tips for proving exemptions and staying compliant amidst these changes. Click here to watch the recording.

Staying informed and proactive is key to navigating the complexities of labor law compliance. With HumCap’s HR services, you can ensure your business remains compliant and thrives in this dynamic environment. Schedule a discovery call with us today to learn more about how we can support your HR needs.