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HR Resource Blog

This blog is published by the attorneys in Capehart Scatchard’s Labor and Employment Group. On this site, employers and human resources professionals will find useful tips as to how to keep the workplace, and workplace policies, in compliance with state and federal employment laws.
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BEWARE OF RETALIATION

I have written about this topic before but thought it is worthwhile to address the issue again because I am seeing a disturbing uptick in these types of claims: Retaliation.

Too often, when a claim is filed by an employee, an employer becomes angry and wants to fight back and get revenge against the employee for asserting the legal claim. The temptation is real for many employers. They feel betrayed that an employee would accuse them of violating the law. It can get especially personal when an employee accuses an employer of engaging in wrongful discrimination. No one wants to be called a bigot or find themselves on the wrong end of any legal case. But an employer must fight the urge to engage in retaliatory action against an employee for exercising protected legal rights. Mounting a strong legal defense to a filed claim should always be the goal when faced with a legal claim. Retaliation of any kind should not be part of that strategy!

Just about all of the major federal and state anti-discrimination laws protect employees against retaliation in exercising rights vested under these laws. Whistleblower laws likewise provide protection against retaliation. So ironically do many employer policies themselves. Yet, employer retaliation happens. And when it does, it will often provide an employee with an even stronger legal claim than the one that was originally being pursued, which only makes it harder to mount a successful legal defense. 

When I think of retaliation claims, I am reminded of what William Shakespeare once wrote in his play “Othello” about jealousy being “a green-eyed monster.” In the realm of labor and employment law, one can fittingly say the same thing about retaliation and its own resemblance to that same famous literary creature. Employers must fight the urge to succumb to the “green-eyed monster” of retaliation. Just as jealousy wreaks havoc in Othello’s life in the famous Shakespeare play, so can retaliation for an employer in its efforts to remain compliant with labor and employment laws.

Along with fighting that retaliation urge, employers should always ground their workplace decisions in legitimate (and well-documented) non-retaliatory reasons for any actions that you take against an employee. That way, you will always give yourself a strong viable defense to such allegations. Increasingly, I am seeing sophisticated employees when they know their employment time is short go on the aggressive and claim that the employer is doing something illegal in the hope that it will cause the employer to delay any adverse employment action against the employee. In those situations, it is more critical than ever that employers have a well-documented history of the employee’s performance problems to counter any contention that the action is occurring for a retaliatory reason.  

The temporary taste of vengeance is fleeting, just ask Othello. Fight that temptation at all costs so you too do not become just another tragic figure like Othello! In the end, retaliation claims can ultimately cost your company a lot of money, so always make good employment decisions rooted in legitimate business reasons.              

A More Aggressive NJDOL?

Anyone who owns a business in New Jersey knows that it is a very pro employee state in which to operate a company. They no doubt are also aware that the New Jersey Department of Labor (“NJDOL”) can be quite aggressive in enforcing New Jersey’s Labor and Employment Laws, especially if your company has been the subject of a wage and hour audit by that agency and experienced just how uncomfortable such an investigation can be. But are such audits becoming even more difficult and uncomfortable? Is it possible that today the agency is becoming even more aggressive and pushy in how they are treating companies and their staff in performing these audits?

Unfortunately, I am seeing a trend in that direction recently. A pair of my clients have been cited for a “hinderance” violation, meaning that the client is being accused of not cooperating in the investigation process. Such an offense carries a heavy potential fine of at least $1000 and is considered a serious violation.

So, what did my clients do to receive such a citation? They must have done something very significant to get cited for such a violation, correct?

Wanna know what my clients did? When the investigator from the NJDOL showed up unannounced and unexpected at their company the client simply advised the investigator that they did not want to move forward with the investigation without having their attorney involved in that process. Wow, such audacity….to have the nerve to not want to answer questions from a governmental official in a quasi-criminal proceeding without the company’s constitutionally protected right to utilize a lawyer in such a legal proceeding! 

Before I began seeing this unfortunate trend, my experience was that once an investigator was told that counsel was desired, the inquiry stopped and did not continue until counsel became involved and no one was cited for “hinderance” in making that request. I do not know why this practice suddenly changed. Maybe it is because the agency has become more aggressive post pandemic? Or maybe there is a heightened pressure being placed on the agency to more rigorously enforce New Jersey’s wage and hour laws and be less accommodating to those being investigated. Or maybe the agency just wants to prevent a lawyer from getting involved in the investigation as long as it can. Whatever the reason, companies need to be aware of what is occurring.

Despite this recent trend, if confronted with an audit, companies should still immediately reach out to counsel and get their lawyer on the phone quickly so there can be an early direct line of communication between the lawyer and the investigator. The lawyer can then counter any aggressive tactics of the investigator at the outset of the investigation and protect the company’s legal rights in the process. That way, for the client, there is less of a chance of being accused of hinderance for anything that the client may do at the outset of the investigation and the company receives the benefit of having an attorney involved early in the process.   

Wage and hour audits are not the most fun for a company to experience, especially now, when dealing with an even more aggressive investigator. Nonetheless, getting your company’s labor and employment attorney involved at the outset of the investigation will better protect the company’s legal rights and thwart the activities of an extremely aggressive agency investigator.             

What Do You Know About Hair Discrimination?

I received a very interesting question this month on behalf of one of our firm’s clients. The client wanted to know if it could include in their Dress Code and Grooming policy a provision barring employees from having unusual, atypical hair coloring, such as blue, green and/or purple hair. At first glance it should be an easy question to answer. One would think when it comes to grooming policies employers have a wide degree of discretion in deciding the appearance and image that they want their employees to project to the general public. But the legal answer is a little more complicated than that when it comes to employee hair styles.

New Jersey, like several states, has what is known as the “Create a Respectful and Open Workplace for Natural Hair Act” (CROWN Act). It is part of New Jersey’s Law Against Discrimination (“LAD”). The CROWN law specifically prohibits discrimination based on “traits historically associated with race, including, but not limited to, hair texture, hair type, and protective hairstyles.” The CROWN Act LAD amendment further defines “protective hairstyles” to include “such hairstyles as braids, locks and twists,” but does not limit the definition to just those styles alone. New Jersey passed this law largely because of an incident involving an African American high school wrestler who was forced to cut his dreadlocks. Otherwise, he was going to be disqualified from participating in his match.

In light of the CROWN Act, employers in New Jersey need to analyze carefully dress code and personal appearance policies to make sure that any limitations on hair styles do not run afoul of its restrictions.

So how would the law apply to the question posed by the firm’s client? Prohibiting unusual hair colors likely would not violate the CROWN Act unless someone can argue that a particular hair color that is banned is historically associated with race, which could be hard to do in most circumstances. As this example shows, however, employers have reason to give such issues more legal thought than one would expect might be required because of the restrictions of the CROWN Act.

The moral of this story—­always scrutinize your employment policies closely and have a thorough understanding of all potential protected classes under the LAD to avoid every type of wrongful discrimination claim.      

Beware of Retaliation: The “Illegal Green-Eyed Monster”

I was recently reading a newspaper (yes, some people still do that!) and came across an article about an all-too-familiar situation for some employers. The article reported a case involving a former employee of an employer who was fired after he intervened as a witness on behalf of a co-worker who alleged that she was sexually harassed. The employee sued the employer claiming a retaliatory firing because of his involvement as an unfavorable witness to the company on the co-worker’s sexual harassment claim. The employer argued that the employee was fired for performance issues, but the jury did not buy the argument. The fired employee was ultimately awarded $3 million dollars in damages. 

As I was reading the article, it reminded me of what William Shakespeare once wrote in his play “Othello” about jealousy being “a green-eyed monster.”  In the realm of labor and employment law, one can say the same thing equally about retaliation and its own resemblance to that same famous literary creature.

Too often, when a claim is filed by an employee, an employer becomes angry and wants to fight back and get revenge against the employee for asserting the legal claim.  The temptation is real for many employers. They feel betrayed that an employee would accuse them of violating the law. It can get especially personal when an employee accuses an employer of engaging in wrongful discrimination. No one wants to be called a bigot or find themselves on the wrong end of any legal case. But an employer must fight the urge to engage in retaliatory action against an employee for exercising protected legal rights. Mounting a strong legal defense to a filed claim should always be the goal when faced with a legal claim. Retaliation of any kind should not be part of that strategy!

Just about all of the major federal and state anti-discrimination laws protect employees against retaliation in exercising rights vested under these laws. Whistleblower laws likewise provide protection against retaliation. So do ironically many employer policies themselves. No doubt, most employers like the one here likely had its own anti-harassment policy that urged employees to invoke its procedures without fear of any workplace reprisals. Yet, employer retaliation happens. And when it does, it will often provide an employee with an even stronger legal claim than the one that was originally being pursued, which only makes it harder to mount a successful legal defense.  

Thus, employers must fight the urge to succumb to the “green-eyed monster” of retaliation. Just as jealousy wreaks havoc in Othello’s life in the famous Shakespeare play, so can retaliation for an employer in its efforts to remain compliant with labor and employment laws.

The temporary taste of vengeance is fleeting, just ask Othello, or this employer as it is writing out that $3 million check. Fight that temptation at all costs so you too do not become just another tragic figure like Othello!             

Are You Ready For The New Jersey Pay Transparency Act?

Editor: Sanmathi (Sanu) Dev, Esq.

Below is an article written by my colleague, Ralph R. Smith, 3rd, Esq., Co-Chair of our firm’s Labor & Employment Group. If you wish to view additional articles and/or be kept up-to-date with labor & employment issues, visit our HR Resource blog by clicking here.

The Pay Transparency Act of New Jersey (“Act”) became law on November 18, 2024, and goes into effect on June 1, 2025. It requires employers to disclose salary ranges in all job postings, including internal and external postings for new jobs, promotions, and transfers. The law further requires that the employer provide a general description of benefits and other compensation programs for which the successful candidate may be eligible. 

The Act applies to employers with 10 or more employees over 20 calendar weeks and who do business, employ persons, and or who take applications for employment within New Jersey, including the State, any county or municipality, or any instrumentality thereof. The law, however, does not indicate whether you count all company employees or only those employed in New Jersey in determining its coverage.

Employers under the Act must disclose the hourly wage, salary, or salary range for job openings and provide a general description of benefits and other compensation programs available for the selected candidate. The law further provides, however, that this requirement does not “prohibit an employer from increasing the wages, benefits, and compensation identified in the job opening posting at the time of making an offer for employment to an applicant.”

In addition, employers must make “reasonable efforts” to announce internal and external promotional opportunities to current employees in the affected department(s) before making a promotion decision. 

The law contains various exceptions to its requirements. The notice requirement for promotions does not apply to promotions based on years of experience or performance, or to promotions made on an emergent basis due to an unforeseen event. The law also expressly excludes temporary help service firms and consulting firms registered with the Division of Consumer Affairs in the Department of Law and Safety from the pay and benefit disclosure requirements for job postings posted for the purpose of identifying qualified applicants for potential future job openings. However, this exception does not apply to job postings for existing job openings.

Finally, the law contains certain new employee protections. Employers are prohibited from discriminating against or discharging employees for exercising their rights under the law, including discussing or disclosing pay-related information, and from asking about salary history during the hiring process. Significantly, the law does not contain a private cause of action. Rather, the Commissioner of Labor and Workforce Development may enforce the provisions of this law by seeking civil penalties in an amount no greater than $300 for the first violation and $600 for each subsequent violation.

With the June 1 enforcement date just around the corner, employers should review all internal and external job postings to ensure that they are complying with the new law and likewise confirm that any outside recruiting agencies that are being utilized are also meeting these new transparency requirements. Moreover, if you do business in states other than New Jersey, be aware that New Jersey is not the only state with this type of law: similar laws exist in other states (e.g., Colorado, Maryland, and California to name just a few) so multi-state employers are wise to take steps to comply with the transparency laws in those states as well.   

Are Commissions Considered Wages in New Jersey?

Editor: Sanmathi (Sanu) Dev, Esq.

Below is an article written by my colleague, Ralph R. Smith, 3rd, Esq., Co-Chair of our firm’s Labor & Employment Group. If you wish to view additional articles and/or be kept up-to-date with labor & employment issues, visit our HR Resource blog by clicking here.

A very important issue that was never resolved until recently in New Jersey is whether commission payments constitute “wages” under the New Jersey Wage Payment Law (“WPL”). This is an extremely important question under the WPL because if commission payments are considered “wages” under that law, employers who fail to properly pay the right commissions could find themselves adversely affected by the provisions of the WPL, which includes the possible payment of double any “wages” that are wrongly withheld from the employee.

The above issue on commissions and the WPL was recently addressed on March 17, 2025, by the New Jersey Supreme Court in Musker v. Suuchi, Inc. In Musker, the Plaintiff salesperson sought to obtain commissions that were owed for her selling of Personal Protective Equipment (“PPE”) during the COVID-19 pandemic. Along with selling such products, the Plaintiff primarily sold software subscriptions. Plaintiff was paid both a salary and commissions for sales made. Ultimately, Plaintiff sold over $35 Million of PPE products, and a dispute arose over how much in commission income was due and whether that income constituted “wages” under the WPL. The employer argued that the commissions for the PPE sales should be considered “supplementary incentives” and not “wages” under the WPL because PPE was a new product being sold and not its primary business.

Before the case reached the New Jersey Supreme Court, both the Superior Court of New Jersey-Law Division and the New Jersey Appellate Division rejected Musker’s WPL claim, concluding that because her sale of PPE went “above and beyond her sales performance, and the [PPE] commissions are calculated independently of her regular wage,” such commissions did not constitute “wages” under the WPL.

In rendering its decision, the New Jersey Supreme Court rejected both lower court rulings. It concluded that commissions must be considered “wages” under the WPL and cannot be excluded as “supplementary incentives” since they are tied directly to the labor or services of the employee. In rejecting the employer’s claim that the commissions fell within the WPL’s exception for “supplementary incentives” the court declared that compensation that “motivates employees to do something above and beyond their ‘labor or services’” is a supplementary incentive, not commissions, because such payments are directly connected to an employee’s labor and services performed. The court further rejected the other argument raised by the employer that the PPE sales were not part of the company’s normal business and fell within the WPL’s exclusion for “supplementary incentives.” Once the employer began to sell PPE, the Court concluded, it became part of its business, and it likewise declared that commissions will always be considered “wages” under the WPL, regardless of whether they are for new or temporary products, as they will almost always be tied to the employee’s provided labor or services.

Musker is a very important decision for employers to know, especially if your company compensates employees with commissions. It is now more critical than ever to ensure that such payments are properly calculated to satisfy the terms of your commission arrangement with the employee. Otherwise, an employer could face the possibility of a double payment requirement, and a possible award of attorney’s fees, if litigation ensues where there is a dispute over the commission payment. Thus, employers now need to redouble such compliance efforts in the face of the Musker decision.

Third Circuit Upholds 22 Million Dollar Wage and Hour Jury Verdict

The Federal Third Circuit Court of Appeals recently sent an earthshattering reminder to companies about both the importance of complying with critical wage and hour laws and the legal need to pay employees for all time worked. A Pennsylvania employer, East Penn Manufacturing Co., now owes over 11,000 hourly workers $22 million in back pay for time spent dressing and showering after the Court determined that these workers were entitled to compensation for the time they spent putting on and taking off their protective gear (also commonly known as ‘donning and doffing’) to perform their job duties.

Rather than recording and paying for the actual time spent by the employees donning and doffing their protective gear and showering after their shifts, the employer instead granted the workers a five-minute paid grace period before the start of their shift and a 10-minute paid grace period at the end of their shift. However, at trial it was found that employees actually spent more than 15 minutes at the beginning of their shift and 11 minutes after their shift completing these necessary tasks.

The Company argued that any violation of the federal Fair Labor Standards Act (“FLSA”) was “de minimis,” as the donning and doffing activities were claimed to be not actual work activities, an argument ultimately rejected by the court. Because of the nature of the job, and having to work around hazardous materials, the changing and showering activities indeed constituted work; otherwise, according to the court, employees would not have been able to perform the required duties they were hired to do with lead and other hazardous substances. The employer also argued alternatively that paying its employees for the actual amount of time spent changing and showering could lead to employees acting in a dilatory fashion in completing the tasks to increase their possible payout. The Third Circuit responded that in cases of such abuse, employees could always be disciplined if the employee takes too long to complete the required tasks. 

For employers, this case is a critical reminder of the importance of ensuring that you pay your employees properly and always include an accurate accounting of all actual work time. Interestingly, the Third Circuit did not prohibit the payment for a “reasonable” amount of time for employee activities not considered “work,” as the employer tried to do here, but the court failed to delineate how an employer is supposed to draw that legal line so acting in such a fashion could be legally perilous. Therefore, it is important as always that an employee’s paid time either equal or exceed the time actually worked, and pre-and-post-employee activities that are necessary for the employee to perform all required tasks should importantly be accounted for in that calculation. Otherwise, you could be the next employer in this kind of predicament.          

Federal Appeals Court Affirms Ruling That Recreational Marijuana User Had No Legal Remedy Under NJ CREAMMA Law for Failure to Be Hired

As many of you might remember, in the spring of 2023, I wrote a blog on a very controversial ruling in a case involving a critical issue of first impression under New Jersey’s Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act, (“CREAMMA”). In that blog, I discussed how a federal judge in Camden, New Jersey ruled that remarkably the CREAMMA law did not allow an employment applicant whose job offer was revoked due solely to his use of recreational marijuana to sue for wrongful failure to hire, despite the fact that this law specifically precludes employers from taking adverse action against employees or job applicants solely based upon that very use. The ruling in Zanetich v. Wal-Mart Stores East, Inc. was ultimately appealed to the federal appeals court for the 3rd Circuit where recently the lower court’s decision of a lack of a private cause of action under CREAMMA was ultimately affirmed, meaning that at present, there is no private cause of action right to judicially enforce CREAMMA’s antidiscrimination provisions.    

As a refresher on the case’s factual background, the Plaintiff had filed a job application for employment with the Defendant employer. An offer of employment was conditionally extended by Defendant, subject to a negative drug test. Plaintiff’s drug test came back positive for recreational marijuana use. Defendant thereafter proceeded to revoke the previous extended job offer, based solely on the drug test showing positive use of marijuana only.

Thereafter, the Plaintiff filed a class action suit on his own behalf and other similarly situated employees who had wrongfully had a past job offer revoked exclusively because of a positive drug test result for legalized marijuana use in New Jersey. The Defendant eventually moved to dismiss the lawsuit, claiming that there was nothing expressly included in the CREAMMA law that allowed for the bringing of any sort of employment discrimination lawsuit asserting a violation of CREAMMA. Remarkably, despite its prohibition on taking any sort of adverse employment action against an employee or applicant for employment based solely upon that person’s use of legalized marijuana, there is indeed nothing in the law that expressly gives affected employees the right to bring such a lawsuit. Rather, the CREAMMA law created an agency, the Cannabis Regulatory Commission, and gave it the right to regulate, investigate, and prosecute violations of CREAMMA. This provision of the law ultimately led the lower court to conclude that the legislature intended for that agency to be the sole and exclusive designated forum to address these kinds of cannabis employment discrimination claims.

Like the District Court, the Appeals Court relied on well-established law that is utilized when determining whether an implied cause of action can be created where one is not expressly statutorily allowed. The Appeals Court agreed that ultimately the factors to be considered under that case law for supporting the finding of an implicit cause of action for wrongful failure to hire under CREAMMA were absent in the case and did not require the creation of an implied cause of action for job applicants under that statute.  

Next, the Court considered the Plaintiff’s alternative argument that he could pursue his case for wrongful non-hiring as a Pierce claim that permits an employee to challenge an employer’s actions on public policy grounds. In rejecting this claim as well, the Appeals Court ruled that applicants for employment cannot bring a Pierce public policy claim because such claims have long only been legally recognized for those who are already employed and not mere applicants for employment. Finally, the Plaintiff also asked the Appeals Court to utilize a special procedure that would have enabled the case to be sent to New Jersey Supreme Court to get a ruling on this unique state court legal issue. That too was rejected as being unnecessary as there was no significant matter of public importance in the eyes of the Appeals Court and it would serve to only further delay the ultimate resolution of the case.  

The foregoing decision will no doubt continue to surprise many seasoned labor and employment practitioners, and one can reasonably expect that this issue will be addressed by the New Jersey legislature at some point. Also, one significant issue left open is whether this case would have been decided differently had an actual employee been terminated for marijuana use. One could argue that differing considerations there might have led to the recognition of an implied right of action for wrongful discharge under CREAMMA, especially should such a case of that kind be brought in a state rather than federal court where such issues are more liberally construed in favor of employees. 

Thus, despite this recent federal appellate decision, employers should always proceed with caution anytime there is any thought about disciplining an individual for marijuana use. Discrimination due to cannabis use is clearly illegal under CREAMMA, and employers should never act in any legally prescribed way that could impair employee rights in the workplace.

New Year’s Resolutions Every Workplace Should Implement in 2025

It’s hard to believe that another year has passed. Where does the time go these days? With 2025 upon us, employers have a great opportunity to review their internal labor and employment policies and procedures, which can help prevent potential workplace legal issues in the future. Here are six suggested New Year’s workplace resolutions for a successful 2025.

  1. When was the last time your employee handbook was reviewed and updated? Policies and procedures need to be revised periodically to keep current with ongoing changes in the law, especially in a place like New Jersey, where it is frequently the case that additional laws and judicial decisions impose new legal requirements. Therefore, 2025 presents a great opportunity for employers to review handbook policies and bring them up to date with any recent legal changes that impact your workplace, or to reflect changes in your workplace. Alternatively, if you do not have one yet, the upcoming new year provides a wonderful chance for your workplace to reap the benefits of having all relevant workplace policies kept in one collective document. Relatedly, when was the last time you conducted anti-harassment training for your workforce? While the pandemic years made this harder to do, virtual training is a great way to continue to meet all legally mandated employee training requirements, and more and more in person training is happening again.
     
  2. When was the last time your job descriptions were reviewed and updated?   Job descriptions are very important, especially in gauging compliance with mandated accommodation requirements for persons with disabilities under both federal and state discrimination laws. Ask yourself: do your job descriptions accurately reflect what an employee actually does in his/her job today?  Because courts often rely on how an employer defines the essential job functions of an employment position in assessing disability discrimination and failure to accommodate issues, it is important that all employers maintain updated job descriptions so there will be a point of reference if any issues arise as to what the essential functions of a job position are for accommodation purposes. Moreover, just like employee handbooks, if you do not have job descriptions today, the beginning of the upcoming year is a good time to commence preparing them.
     
  3. Are your employee leave policies up to date?  It is important under both federal and state leave laws that leave policies are accurate and current. One of the most effective ways of meeting this requirement is to have updated leave policies in an employee handbook, so use the beginning of next year to check that such policies are accurate and up to date. 
     
  4. When was the last time you conducted an audit of your payroll practices?  One of the chief concerns to examine here is ensuring that all your employees are properly classified as exempt versus non-exempt employees for purposes of their proper compensation under federal and state wage and hour laws. It is always a good idea for an employer to do a quick review of employment classifications each year in case changes need to be made based upon any modifications in employee job responsibilities or legal requirements. Also, as part of such an audit, make sure that you are paying your employees correctly. If eligible for overtime, are you calculating such payments right and using the appropriate rate of pay? Also, are you paying the correct minimum wage to your employees? Remember, the minimum wage in New Jersey goes up automatically each year, reaching $15.49 per hour in 2025. And, finally, how about independent contractors? If you are using them, are you meeting the stringent requirements here in New Jersey for creating those relationships to withstand legal scrutiny? Failure to follow independent contract rules can lead to significant wage and hour problems, and this topic has been a major subject of investigation in recent New Jersey Department of Labor audits in which I have been involved so the issue is being rigorously scrutinized by state officials.
     
  5. Are you properly performing background checks on current and prospective employees?  Remember, there are strict requirements concerning how such background checks are conducted under not only the Fair Credit Reporting Act but also under relevant federal employment discrimination laws such as Title VII. Several years ago, the Equal Employment Opportunity Commission issued a detailed compliance guidance on how the results of a background check can be utilized in assessing a person’s suitability for employment, and New Jersey also passed its own restrictions, i.e. Ban the Box rules and prohibitions on demanding that employees share information about their confidential social media sites, so it is important that all background check policies meet these requirements. 
     
  6. Are your drug testing policies in compliance with the requirements of both of New Jersey’s cannabis use laws, medicinal and recreational?  Take a moment to ensure that your testing policies are in line with the circumstances that an employer can legally require an employee drug screen and know when you can take adverse legal action based upon a positive screen for marijuana use.   

In sum, the new year provides a wonderful opportunity for employers to proactively evaluate internal policies and procedures to make 2025 a legally problem free year in your workplace. Take advantage of the opportunity so your business will not be singing the legal blues in 2025!

Enforcement of USDOL Overtime Rule Enjoined by Texas Federal Court

As anyone who follows my blogs know, the United States Department of Labor (“USDOL”) implemented new overtime rules that went into effect on July 1, 2024, that increased the salary threshold that had to be met in order for an employee to be deemed exempt and ineligible for overtime payments. The goal of this change in the law was to expand overtime eligibility for employees who previously would not have qualified to receive such payments. On November 15, 2024, a federal judge in Texas found that this new overtime rule was legally invalid and issued an injunction that now prohibits implementation of this rule nationwide.
 
The Texas judge ruled that the DOL exceeded its statutory authority with the 2024 rule that raised the salary threshold from $35,568 to $43,888, effective July 1, 2024, and later to $58,656, effective January 1, 2025. The rule also included automatic triennial updates to the threshold. In light of this decision, Employers no longer need to adjust salaries or reclassify employees to comply with this at present invalid rule. The current overtime threshold at least for now therefore remains at $35,568.

This ruling is likely to be appealed, so we will see if anything changes regarding the decision, though with a new administration taking control in Washington in January 2025, there is a significant chance that this changed overtime rule will be abandoned by the incoming USDOL and the old salary threshold will continue to remain the applicable legal standard.

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