Christopher Coyne, Associate in the Employment, Labor & Workforce Management practice, in the firm’s New York office, was quoted in SHRM, in “Key Factors to Consider in Return-to-Exempt Status Decisions,” by Allen Smith.
Following is an excerpt:
Some employers are on the fence about returning to exempt status those employees who became nonexempt following the 2024 U.S. Department of Labor (DOL) overtime rule, which was vacated on Nov. 15 and again by a separate district court in a Dec. 30, 2024, order. Here are some factors to consider in making that decision. …
2024 Rule ‘Will Remain Dead’ …
Although the Biden administration appealed the November decision vacating the 2024 overtime rule, “history strongly suggests that the appeal will be withdrawn,” said Chris Coyne, an attorney with Epstein Becker Green in New York City. After the Obama administration’s 2016 overtime rule was blocked, the Trump administration said that implementing a salary level set that high did not further the purpose of the Fair Labor Standards Act and was inconsistent with the salary level test’s useful but limited role in defining the executive, administrative, and professional exemption—otherwise known as the white-collar exemptions. There are “no reasons why the new Trump administration will take a different approach to the 2024 rule,” which used a similar large increase in the salary threshold, Coyne said. …
Change in Status …
According to Coyne, the primary factors for employers in evaluating whether to reclassify will be:
- Costs to the business reflected by the past months of nonexempt work by those employees reclassified as a result of the 2024 overtime rule (e.g., what types of functional costs for training and tracking systems have already been incurred).
- How labor costs have been impacted by reclassification (e.g., whether substantial overtime for workers reclassified as a result of the 2024 rule has been necessary).
- Whether supervisors effectively managed these newly nonexempt workers to minimize overtime costs.
- Whether the company has already taken measures to minimize overtime-related costs (e.g., increases to staffing or redistribution of workloads among current staff).
He added that nontangible factors are relevant, too, including:
- Whether the lives of newly nonexempt workers changed based on reclassification due to the 2024 rule (e.g., whether they are working fewer hours).
- Whether employees are earning substantially more overtime as a result of the reclassification due to the rule.
- How returning them to exempt status would affect morale.
“Critical to this question is also an evaluation of how competitors are addressing similar classification questions, and whether this classification decision could impact how competitive the company is in recruiting talented staff,” Coyne said.