California Overtime and the Almost Final Rule

Sacramento, CATime’s Up—or is it? As of December 1, 2016, California employers must adhere to the “Final Rule” that may affect about 400,000 workers who previously were not entitled to California overtime pay. But a federal judge has put the rule on hold…

Six months ago the DOL enacted this policy, which gave employers a grace period to decide whether to raise salaries of their exempt employees above the threshold (an increase of $47,476 from $23,660) or to reclassify employees as non-exempt. For salaried professionals, this could be a blessing or a demotion—depending upon their values. If an exempt employee typically works more than 50 hours a week, the “Final Rule” could be a windfall. Or not…

Unless they have deep pockets, employers likely will choose to reclassify. If an employee values more time off than money, the Final Rule is a good thing: Some employees working 50 hours a week may think they will get 10 hours of overtime pay, but they could get the memo saying they cannot work more than 40 hours. On the other hand, employers may expect their exempt employees to work even longer hours, perhaps even pick up the slack of their fellow reclassified workers who can’t get their job done in 40 hour weeks.

As for the Final Rule stall, the DOL has appealed the injunction and
the 5th U.S. Circuit Court of Appeals has agreed to expedite the case , according to the Society for Human Resources Management (December 15, 2016).

So who will benefit? The coming year may prove to be busy for labor attorneys. Employers who are not in compliance with the Final Rule may face an overtime lawsuit, and depending upon a company’s size, possible class actions. Meanwhile, employees and employers should keep track of exempt workers’ hours…