One million employees to become eligible for overtime pay on July 1

The Department of Labor’s (DOL) new overtime rule is set to become effective next week, on July 1, despite being challenged by the business community.

Background: On April 23, the DOL finalized a rule, raising the minimum salary threshold that exempts employees from being paid overtime. 

• Those in “executive, administrative, or professional” roles who currently make $35,568 a year or less must receive overtime pay.

• But starting July 1, this jumps to $43,888, making around 1 million additional employees eligible.

What’s happening: Several lawsuits have been filed against the DOL, citing labor cost concerns, among other points. 

• On June 12, a coalition of business groups, including ACCA and HARDI, sent the DOL a letter pushing to delay the rule’s implementation.

• “Postponing the effective date… while litigation is pending ensures that impacted businesses and the agency itself do not waste valuable resources by attempting to implement a rule that could be invalidated by a court,” the letter says.

HVAC-wise, the rule applies to certain office employees only — not technicians, installers, CSRs, or dispatchers.

Why it matters: It’s important for contractors, assuming no delay, to know exactly which employees will be affected — and whether to raise their salary or reclassify them as “non-exempt.”

• “I'd recommend [contractors] consult with their legal, tax, and financial professionals to determine what, if any, changes need to be made to their payroll structure to ensure compliance,” ACCA’s Chris Czarnecki tells Homepros. 

Looking ahead: A federal court hearing on the business community’s delay requests was held in Texas yesterday. There’s no word yet, but a decision is expected before July 1. 

• Keep in mind, a delay is possible: In 2016, a similar Obama administration rule was blocked a week before its effective date.