Your clients are on the clock

Opening Statement

Marc Karlinsky

Editor

Last month, I had the chance to attend a conference in Springfield that featured a discussion on the changes to federal overtime rules taking effect on Dec. 1.

There’s been plenty of chatter since the announcement in May over how the Department of Labor’s regulation will extend overtime pay eligibility to millions of workers who previously were deemed exempt based on their salary. But the presenter also noted the change comes at the same time the Labor Department plans to bolster its budget to enforce overtime regulations.

On further examination, the proposed fiscal year 2017 budget for the department’s wage and hour division requested about $277 million — a little more than $49 million more than it received in the past two budgets — to put partially toward enforcement. Whether or not the government can convert money into policy results remains to be seen, but it’s clear they’re serious about trying to change how salaried work is treated in this country.

That added enforcement budget should make companies take pause over another element of the overtime landscape. The presenter explained how many companies misapply the “duties test” to determine overtime exemption — improperly deeming many low- or mid-level workers as “professional” or “administrative” employees. The person’s title and job description only matter so much; if there’s a question of eligibility, the burden falls on the employer to show why time-and-a-half pay doesn’t apply.

For countless other businesses across the country, the next few months are enough to make owners, fiscal officers, managers and HR professionals’ heads spin trying to prepare for a new world of labor rules.

It’s worth mentioning the new overtime policy, just like the old one, does not apply to lawyers. (Keep billing those hours, associates!) But those companies will certainly be relying on their in-house and hired counsel to advise them on how to proceed. If those calls haven’t started trickling in, they will soon.

The White House and Labor Department, in unveiling and explaining the rule change, are telling employers they have several simple options. They can evaluate their staffs and confirm that all employees are already exempt. They can raise salaries or adjust wages. They can pay overtime above workers’ salaries. Or they can adjust workers’ loads, schedules and hours.

But those are hardly simple in practice, with morale and so many other factors at play. It’s going to take creativity — and a bit of caution — to make things work.

This change has the potential to be one of the central legal challenges faced in 2016, and I want Chicago Lawyer to be part of the discussion. Is your firm or client doing something outside-the-box to address the changes? Are there colleagues challenging the policy or advocating for changes at the bureaucratic level? Is this all just an overreaction? Let us know what you think and what you’re doing.