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Exempt, Non-Exempt, Overtime? Now What?

  • Author: Kathy Barany
    11/25/2016

    For months employers have been preparing to comply with the revised/new federal overtime rule that was scheduled to go into effect December 1, 2016.  November 22nd, just a few business days short of the effective date, an injunction was issued to temporarily halt that new rule.  In plain language, this means that employers don't have to make any changes effective December 1st.  Some employers were preparing to change some exempt employees to a non-exempt (hourly) status, or were giving salary increases to bring some exempt employees to the new salary threshold minimum.

    So what happens if you have already made those changes? or, at least told the employees those changes were going into effect?  Those who know me, can already guess that my answer will be "it depends".  Technically, you can reverse anything you have done.   If you have given a salary increase, you can take it away.  If you have told an exempt employee that they will now be non-exempt, you can undo that and make them exempt again. However....technical doesn't always rule (pun intended).  Before changing anything back to what it was, think of what it will do for you employee relations wise.  Your decision to undo, might very well not be the best decision.

    Remember also that this is a "temporary" injunction.  It doesn't mean it's halted forever and a day.  It means that the courts now have to study whether or not they feel the new rules are valid enough to be implemented.  Keep in mind also that the federal DOL can appeal the injunction.  It was our current President who issued the directive to make this happen; we are not guaranteed that our next President will uphold that directive.

    And federal government aside, New York State recently proposed tht they want to increase the salary threshold for some exempt employees.  For NYS employers NOT in New York City, or the counties of Nassau, Suffolk, and Westchester, it is proposed that effective December 31, 2016 the minimum salary threshold for Executive and Administrative employees be raised to $727.50 per week.  If approved, it will gradually increase over the next 4 years to $937.50 per week (even higher than the now halted federal of $913). The Professional category for NYS will remain at $455....unless the federal injunction is overturned and we have to proceed with the $913 minimum.

    Confused?  Join many others who are.  My opinion is that the judge wouldn't have issued the injunction if he didn't see some merit to doing so.  If I was the employer, and I had changed an exempt employee to non-exempt as a result of the anticipated change, I might tend to change them back to exempt.  If I was the employer who had raised an employee's salary to the new salary threshold of $913, I would leave it as that.  Personally I want to add shame on the employer who only raised their employee's salary so they could keep them exempt!  We should be paying employees every day what they are worth; not raising their salary to comply with a law.

    So what SHOULD you do?  The bottom line is that we just don't know; it depends.  Each situation/employee has to be looked at and the right decision made based on individual circumstances.  Like the weather here in Central New York, we can't accurately predict on this one.  We do suggest, however, that you take this time to thoroughly evaluate each exempt position to ensure it can stay exempt based on the duties test; once that is done, it is a simpler decision with regard to salary....because either it will or won't meet the minimum salary requirement.

    Lastly?  Unless you have extensive experience classifying jobs with regard to exemption status, get help from someone who does.  Don't guess and "take your chances"; it could be a costly mistake to do so.

    Stay tuned for more developments and opinions.

     

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