Last week District Court Judge Amos Mazzant in Plano, Texas ruled that recent overtime changes to the Fair Labor Standards Act would not be implemented. You may have heard about this and even been preparing. The changes would have increased the minimum wage for application of the rule to about $47,000 per year. Anyone who made less than this amount and is doing executive work would need to be paid time and a half for any work week over 40 hours and would need to make minimum wage when averaged out despite their salary. It can be a gigantic administrative headache for a business to manage the workweek of each executive employee. By definition, these are employees that businesses want on hand for emergencies and condensed sales cycles without the fear of excessive compensation rules.
The current rule instead remains at its previous levels of about $23,000 minimum salary. Any employee that makes that amount or less needs to be tracked and paid overtime and minimum wage where necessary. Failures to account for proper overtime and minimum wage laws have historically seen large fines from the Department of Labor. Such fines could shut down a medium to small business.
Importantly, the department of labor has said it will still be raising the bar. The projection is out to something close to $35,000 per year. Courts should allow such a salary level change. Congress could also pass a specific law over the top of these regulations. The law requires properly classifying employees and compliance with the requirements of the FLSA.
The moral of the story is, an employer with one time clock always knows what time it is; an employer with two time clocks is never quite sure. Business owners and managers should consult with the attorneys at Horn & Johnsen today to review the classifications and job characteristics of their employees and independent contractors.