In case you missed it, last week a federal court in Texas set aside a U.S. Department of Labor Rule which mandated higher salaries for certain employees classified as exempt from overtime under federal law.
This ruling happened after some companies had already raised certain employee salaries to comply with the new requirements, some of which had gone into effect months earlier, in July 2024.
In light of this news, many executives are asking whether they should adjust their employees’ salaries as a result. But businesses should avoid making a snap decision in response to a legal development like this.
Here are some factors that companies should consider in structuring employee pay:
- What law applies to this employee?
- What overtime exemption(s), if any, could apply to this role?
- What is the minimum pay rate required to qualify for an overtime exemption?
- Do the employee’s actual duties fit within an exemption under federal, state or local law?
- Are there risks in changing compensation repeatedly in a short period?
The decision of how to pay an employee and whether they could be eligible for an overtime exemption is highly fact-specific and nuanced. In evaluating the above factors, business leaders should be closely collaborating with experienced employment counsel who can help them weigh the risks in light of an ever-changing legal (and business) landscape.
Exemption decisions should not be made without professional input; they should always be made in conjunction with an experienced employment attorney.
If you have any questions, please feel free to contact our attorneys at Greenwald Doherty LLP.
