Salary Change Stopped – Now What?

By Bill Wright

A federal court has ruled that the U.S. Department of Labor might have overstepped its boundaries by implementing a salary threshold of $913 a week for executive, administrative and professional exemptions. But if you have been planning to comply with the regulation by next Thursday, what are you supposed to do about it?

First, there is a possibility that the court of appeals will see the issue differently than the district court. Consequently, we have no certainty about the salary threshold for these exemptions.

Second, the injunction is not permanent. Consequently, again, we have no certainty about the salary threshold for these exemptions.

Third, if you changed previously salaried employees to hourly and made them non-exempt, everything is fine. You can leave them as non-exempt, pay them overtime premium pay, and you will be complying with the law however it turns out.

But, if you gave exempt employees raises, how do you roll them back now? Everything depends on how you communicated the raises. If you made no contracts or other enforceable promises, you can reduce salaries again just as easily as you increased them. The problem is the employee relations – smoothing over the employee’s unhappiness over the bait and switch. At this point, we don’t know whether to laugh or cry.

Given the late date for this ruling, it is hard to see how we could have certainty about this rule before DJ Trump takes office. His administration might decide to drop the appeal, or to accept a permanent injunction.