As we’ve reported and discussed at multiple meetings, the Department of Labor has updated the requirements for an employee to be considered exempt from overtime. The transition was in two parts with the first becoming effective in July and the second on January 1, 2025. The second part of this will need to be watched over the next few weeks.

There are two tests that employee must meet in order to be deemed exempt from overtime. The first is a “Duties Test”. This really hasn’t changed much over the years. You can find a number of jobs that can be exempt from overtime on this page. That link takes you to Fact Sheet 17A. These are the most common exemptions but there are a lot which I won’t get into today. Most gin employees that are salaried fit in one or more of these fact sheet descriptions. If you think an employee is exempt from overtime MAKE SURE YOU KNOW WHICH FACT SHEET AND JOB APPLIES.

The second test is a “Wage Test” or “Minimum Salary Test”. This is the part that is changing. The employee must be paid on a salary basis and must currently receive $844 per week. That was raised in July from the previous $684 per week. Beginning January 1, 2025, under this final rule, the minimum salary must be $1,128 per week or $58,565 per year. This is the part to watch.

I don’t believe I’ve written about the Chevron Deference but “Chevron” was a legal principle that came from a Supreme Court ruling in 1984. It pulled authority for interpretation of ambiguous rules from the courts to the agencies that made the rules… giving the agencies “deference” in the interpretation. This all changed earlier this year with a new SCOTUS ruling that effectively struck the Chevron Deference and moved at least some of the interpretations back to the courts. This case is known as the Loper Bright decision.

Since Loper Bright a number of rules are being challenged in the courts…including the final rule linked above raising the minimum salary for exempt workers. What happens with this could be affected by the recent elections. Early in President Trump’s first term the administration was faced with a similar increase from the Obama administration’s rule. The Trump administration didn’t kill the rule but called back the amount of increase. Because the rule hadn’t been totally implemented before he took office, he was able to modify it but since this rule kicks in BEFORE his inauguration, he can’t stop or modify it… or can he?

There is a lot of speculation swirling around this one. If the courts strike the rule completely do we go back to the previous rule altogether? Probably not. These court cases will likely strike the January 1, 2025 and later changes or could temporarily enjoin the rule delaying the implementation until after Mr. Trump takes office. The new administration hasn’t indicated their intention on this one so we don’t know what they would do. Will they do like they did last time and temper the increase in wage, will the roll back to the July wage or will the develop their own rule.

We will have to wait and see but because this could affect many of our members particularly in the administrative positions, we think it would be prudent to follow this as best you can. We will send an update when things become clearer.

DSF