Overtime Eligible Everyone?

It does not seem like that long ago that a federal court entered an injunction against a federal agency in the space of overtime eligibility under the Fair Labor Standards Act. Believe it or not, that was back in 2016/2017, concerning an Obama Administration action. The case was National Federation of Independent Business v. Perez.

The Biden Administration's Department of Labor has us back in Texas. Among other things, at issue essentially is whether, as of this July, most employees making less than $43,888 per year will disqualify for the "exempt" status to which they are accustomed; and whether, to qualify as a "highly compensated employee" who is "exempt," employees must be paid $132,964; with those going up to $56,656 and $151,164, in 2025. That is up from the current amounts of $35,568 and $107,432.

Unless there is another injunction or a lot more money starts flowing to employees (even for very small employers who often struggle to turn a profit), a whole lot of overtime liability is likely to start piling up, in just a few weeks. For those employees inclined to cheer, beware that, like the consequences unfolding because of Secure Act 2.0 (which was meant to benefit employees but many employees are finding themselves fired upon reaching 499 hours), many employers can be predicted to pivot in a way employees might not like--including increased micromanaging of their time including by requiring clock in and clock out, reduced flexibility to work from home, and no longer paying on a salary basis, which means no pay will be made for time spent not working rather than a full week's pay being made even when less than a full week of work is provided. For those workers who like being treated as an exempt employee, the prospect of higher pay may prove less rewarding than it sounds. And that is to say nothing about what impact this might have related to inflation--meaning the pay that is received may continue to be diluted by an increase in good and service costs, imposed to keep pace with the financial burden on employers presented by increased payroll.

If Texas Attorney General Ken Paxton and numerous business associations have their way, there will be an injunction like there was back in 2017. The cases to watch are Piano Chamber of Commerce et al. v. Julie Su, Acting Secretary, U.S. Dept. of Labor et al. and State of Texas v. U.S. Dept. of Labor, et al. Both cases are pending in the U.S. District Court for the Eastern District of Texas.

As we represent both employers and employees, we will help employers figure out a path that works best for them; we also will help employees receive what the law says they are owed. Personally, I would like to see businesses and people left (by governments) more free than present trends allow to reach the arrangements that work best for them. For better or worse, that is not the trend.