FLSA Overtime

1 month ago

The latest update on FLSA as of 11.18.2024

As noted in last week’s article (see below) the Eastern District of the Texas District Court has vacated the 2024 Fair Labor Standards Act rule increasing the salary threshold for exemption of overtime. The District Court addressed both the planned increase on January 1, 2025, and the increase that occurred July 1, 2024, signifying that the rule exceeds the Department of Labor’s authority and is unlawful. What does that mean for employers? It provides employers with additional flexibility as to what they are going to do. However, if employers have already communicated to staff that their salaries are going to increase, holding off on those increases could cause significant morale issues. Therefore, we recommend that employers who have announced increases consider any changes to what they have announced very carefully. For those employers who felt that they would just have to limit over time rather than increase salaries, things may be a little bit easier to change. However, those employees who newly fell into a non-exempt status on July 1, 2024, and those employees who thought they were going to move over to non-exempt status January 1, 2025, will likely be upset with the removal of time-and-a-half payments even if working limited overtime. If you have any questions about this item or any other wage and hour items, contact SWHRC.com for more information about where we can provide support and assistance.

As noted previously on the Southwestern HR Consulting website, the Feds had increased the exemption threshold for purposes of overtime which could, in many cases, wipe out the test on the level of duties a person performs and makes the person’s income a predominant factor for determining whether an employee gets overtime.

On July 1, 2024, the annual take home pay to qualify for overtime went from $35,568 per year ($684 per week) to $43,888 per year ($844 per week). The second phase changes the threshold again on January 1, 2025, from $43,888 to $58,656 per year ($1128 per week).

This means that anyone that falls in the new gap right now ($43,888 to $58,655) would have been slated to become non-exempt, meaning eligible for overtime rates if they worked more than forty hours in a week effective January 1, 2025. Employers were poised to either increase wage rates or pay more overtime effective the 1^st. Others had planned to hire more employees so as not to have to rely on overtime.

However, two things are happening simultaneously. One is continued litigation over the legality of this rule and the second is a change in national administration.

What does this mean and what is an employer to do?

We recommend that employers continue to apprise themselves of this issue in the next month-and-a-half to see what happens. In the meantime, Southwestern HR Consulting (SWHRC) will continue reporting as we hear more news. If you need Human Resources expertise, we can help you at Southwestern HR Consulting (SWHRC). Contact SWHRC today at the link above to talk to find out about our services and our team of experts.