Last year, the U.S. Department of Labor ratcheted up the salary threshold for overtime eligibility by more than 100 percent. Employers had until December 1 to comply, and many opted to give affected employees substantial salary bumps to avoid huge spikes in overtime compensation.
That all came to an abrupt halt, though, when a federal judge blocked the rule nine days before it was implemented. Now the viability of the change is in question, as it is likely to receive pushback from Congress and the Trump administration.
This poses an interesting predicament for the companies that took measures to achieve compliance before the rule actually went into effect. What do you do if you went ahead and raised salaries only to find that you jumped the gun?
Here are three possible situations in which you may find yourself – and what to do next:
1. You’ve Already Given Raises to Certain Employees to Make Them Exempt
Whatever you do, you can’t take them back – nor should you.
Hopefully, you gave raises to people who deserved them. Now it’s a question of getting your money’s worth, which might mean assigning responsibilities commensurate with employees’ new levels of pay.
If you have honest conversations about the pros and cons of salary versus overtime with employees whose salaries were prematurely increased, some might opt to return to overtime on their own. Others may prefer to remain salaried at a higher level.
Either way, you’re going to have to crunch some numbers to ensure you’re getting the optimal output, deliverables, time commitment, and so forth necessary to balance their higher pay with your need to maintain operational order.
2. You’ve Told Employees They Will Receive Raises When the Law Takes Effect
This is a sticky situation.
Employees all over the country were promised raises, planned for them, and are now facing retractions. Again, the hope would be that any raises you promised were at least partially due to merit. Framing a salary increase in terms of performance makes employees feel more valued than saying it’s happening because the government says so.
However, now that the law has been delayed, the simplest solution is to say that it didn’t go into effect – therefore, no raises. Sure, you’re likely to ruffle some feathers and the law may get pushed through relatively soon, but you’re being sincere.
If employees feel resentful or misled, candid conversations are in order. Reframe the dialogue around performance and merit rather than legal requirements. Again, this may serve as an impromptu opportunity to reassess staff, refine responsibilities, or find roles that make more sense.
3. You Did Nothing, and Now You’re Wondering About the Best Course of Action
If this is you, you got lucky.
At this point, you can provide salary increases where merit warrants them, so take this opportunity to assess compensation. Maybe it’s time to give some people raises, regardless of the law.
Now is the time to prepare for the future implementation of the new law. Be proactive and keep your employees in the loop, even if that means saying you don’t yet know what the company will do. Just getting these upcoming changes on employees’ radars can take a lot of stress out of a charged situation.
In the end, dealing with new regulations like these is a matter of planning and open communication. Get out ahead of new rules, but be transparent with your employees about the expectations that go into balancing overtime, salaries, and the work necessary to justify the expense.
Between the potential for more pay, your honest communication, and the prospect of new responsibilities, you might find that your employees are willing and able to give more than you previously thought.
Tony Delmercado is the COO at Hawke Media, the founder of 1099.me, a passionately curious entrepreneur, and an all-around solid dude.