'Don't Panic' Over Prospect of Major OT Reform

Litigation attorney Peter Hall was interviewed by Law360 about how employers should respond to the U.S. Department of Labor's proposed overtime rule. The rule would raise the overtime threshold by nearly $20,000 to about $55,000 per year. Mr. Hall advised that though the number may appear drastic at a first glance, it's important to take a step back before making changes.

"Let's first get our arms around some data about the workplace that we may not have been paying attention to before, and then let's make the best decision we can based on the data," he said. "There's no reason to panic or immediately start doling out 10 or $20,000 raises."

For example, Mr. Hall said, companies should focus on employees earning around $35,000 or just below the new threshold, as they are at the greatest risk of going from exempt to nonexempt. Understanding how much those employees are working can help employers gain perspective on the potential effects of that change.

"If I have a bunch of employees who are making $42,000 a year, but only working 37½ hours, yes they may be reclassified to nonexempt," he explained. "But that doesn't really change a lot in terms of my company's overall labor costs because they're not working any overtime."

Mr. Hall added that an important factor to consider beyond the labor costs is employee morale.

"If somebody has worked for years to get out of the hourly into a salary position and now all of a sudden they get knocked back to nonexempt that can, in some positions, be a bit of a blow," he said.

READ: 'Don't Panic' Over Prospect of Major OT Reform (Subscription required)