You Made Changes to Your Overtime Rule: Now What?

You Made Changes to Your Overtime Rule: Now What?

By Camille BradburyPublished On: January 8, 2025

By now, employers know that the overtime rule has been struck down and has returned not to July 2024 levels, but to 2020 levels set during the Trump administration. Beyond complying with reclassification, dropping salaries or remaining the course, there are important considerations to watch out for that come with these decisions.

In November 2024, a federal judge in Texas ruled that the Department of Labor (DOL) exceeded its statutory authority because it raised the salary too high, which made the duties test irrelevant. This ruling had [immediate effect nationwide]. Experts say that the DOL could appeal, but they are currently evaluating the decision with the Department of Justice and most experts think there is not a strong chance of appeal, especially with the incumbent Trump administration.

So, where does this leave HR? What are most employers doing? According to a poll taken during Brightmine’s Overtime Rule webinar 47% of respondents answered they are going to stay the course, meaning whatever decisions they made during July 2024 with the last increase will stay in place, while the rest are still deciding.

Experts say there are three choices employers face in 2025 when it comes to the ruling:

Lower exempt employees’ salary to $684 per week, returning to 2020 guidelines.
Reclassify employees if you changed some from an exempt to nonexempt reversing course.
Stay the course if you made changes in 2024 and wait out any appeal from the DOL.

As this legislation comes from the Fair Labor Standards Act (FLSA), payroll specialist Rena Pirsos, JD gives her advice when it comes to making changes.

Tips for Payroll Compliance

Pay attention to state salary minimums. Six states require higher than EAP (Executive, Administrative, and Professional) salary threshold, which include Alaska, California, Colorado, Maine, and Washington. Keep in mind that you can’t go lower than state wages.
You can reclassify employees when you change the pay rate.
When you reclassify employees, be aware of pay frequency and lag times that may change when payroll systems are updated. Some jurisdictions and/or industries (like manufacturing or agricultural, for example) have their own requirements. In California, film production roles are different from general requirements.
Check state laws when changing pay and when to provide notices. For remote employees, the applicable state laws are where the employee is located.
Some employees are required to be notified, others are not. For example, state and city require form and method of distribution to all employees or affected employees only. Some require online vs. paper, and others that a notice must be posted where employees can see it.
Remember to comply with all record-keeping requirements, such as keeping a copy of notices in payroll files for a certain period of time.

Keep in mind, when it comes to compliance, the most challenging part for HR is navigating employee repercussions with decisions that reverse course. Changing an employee’s pay or status can impact morale, causing turnover, lower productivity, absenteeism, and workplace conflict.

Another issue can be discrimination which is hot topic for Equal Employment Opportunity Commission (EEOC) in 2025. What you do for one employee should apply to all, or you should be ready to prove why it’s only applied to a single employee’s status. Another thing to consider is that this overtime ruling doesn’t impact employee contracts or collective bargaining agreements (CBAs).

For 2024 and 2025, it’s recommended to double check all changes made to determine if there are any discrepancies between these rules, and to proceed with caution and full transparency when considering changes.

The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.