Remember those overtime rules you worked so hard to implement last year? And remember how you found out, mere moments after implementing them (or for the procrastinators mere minutes before they did implement) that the rules were now on hold? What happened to those?
Federal overtime rules
The final Department of Labor rules to increase the salary basis threshold from $455/week to $913/week was set to go into effect December 1, 2016. In short, exempt employees must meet certain duties test AND be paid a minimum salary threshold in order to be exempt from overtime. As a result of this rule, employers scrambled to decide whether to increase their salary employee’s pay above the threshold and keep them exempt or start treating them as hourly. Then on November 22, 2016, a district court in Texas issued an injunction halting implementation of the rule.
Prior to President Trump taking office, the Texas court was prepared to have a hearing on the underlying issue to determine if the injunction would stand permanently. However, since then the Department of Labor, without a Labor Secretary, has continued to seek extensions for the briefs and the hearing. The expectation is that newly-confirmed Secretary Alexander Acosta will withdraw DOL from the lawsuit. However, the AFL-CIO, a very large labor organization, sought to intervene. Essentially, they could continue the lawsuit if DOL steps out and continue to press for the $913/week.
So, where does that leave you employer? Watching the federal court case. And also watching to see if the DOL, under new leadership, proposes new rules.
Wisconsin overtime rules
Did you realize that Wisconsin also requires that exempt employees meet certain salary thresholds or are subject to state overtime rules? Historically, the salary basis here has been $700/month. If you are paying the $455/week for federal law, you easily exceed the Wisconsin threshold for your typical 9-5 employee and that’s why you haven’t heard much about Wisconsin’s law. Until now.
There are proposed bills in both the Wisconsin Assembly (AB154) and Senate (SB103) to raise the current $700/month threshold to $970/week. The same threshold that was originally proposed by DOL, but was later modified down to $913/week given the backlash. So an employee that was making $23,660 annually would now need to be paid $50,440 in Wisconsin in order to continue to be exempt from overtime. Obviously there are very large cost implications to employers.
According to the 2017 SHRM Policy Guide, SHRM does support an update of the salary level, but one with a more reasonable increase. Raising the threshold so quickly presents significant challenges for employers, especially small employers and nonprofits.
How would this impact your employer with this increase? Since the federal rule is on hold, and we expect to see some changes, you may want to take a wait and see approach there. But you may want to remind your local legislatures of the headaches this $970/week threshold would cause for employers and ask them to consider a more tiered approach to implementing salary basis increases.
Click here and enter your zip code in the Find your Elected Officials box for a list of your State Representatives and Senators. Write to them, call them, even Tweet them. Not sure how to get started? We’re happy to help – contact any member of the Fox Valley SHRM Board!