Employers have numerous legal obligations to their workers that make bringing in new talent relatively expensive. Companies often include special terms in their contracts and unique rules in employee handbooks to fulfill their legal obligations and reduce their risk of a lawsuit.
Employees who understand what benefits and wages they should receive and what the company expects from them are less likely to take issue with their treatment at the company. Clarity about wages is of the utmost importance for an employer’s protection. They also need to carefully abide by both federal and state employment statutes regarding worker pay. For example, a pending shift in federal employment policy might open some organizations up to the risk of overtime-related wage and hour lawsuits brought by salaried employees.
Not all salaries sidestep overtime rules
People generally refer to workers as either hourly or salaried employees. People assume that anyone paid on a salary basis is exempt from overtime pay requirements. However, that oversimplified approach does a disservice to companies and workers alike.
Businesses may unknowingly violate the rights of workers if leadership is unaware of the nuance involved in overtime wage rules for those paid on a salary basis. The federal government maintains a minimum salary that employees need to receive to be exempt from overtime rules. Since 2019, the minimum salary a worker had to receive to be ineligible for overtime wages was $35,568.
That changes on July 1st, 2024. The minimum salary required for a worker to be exempt from overtime pay rules goes up to $43,888 as of July 1st. Six months later, that amount increases again. By January 1st, 2025, employers have to pay workers at least $58,656 annually if they want to avoid overtime pay requirements.
Companies may need to reevaluate how much different workers earn or may need to change their approach to scheduling workers with lower salaries. Companies that do not increase worker wages could eventually face wage claims if employees have to continue putting in overtime without appropriate compensation.
Carefully tracking major adjustments in federal wage and employment laws can help companies avoid scenarios in which frustrated workers might otherwise file expensive lawsuits against the organization. Executives and other leaders within organizations need to stay informed about changing employment laws to avoid violations that could lead to expensive litigation brought by employees.