Lee Jacobs, partner, had his “Wage Whiplash: Surviving a Compliance Roller Coaster” expert analysis article published by Law360. The article highlights the challenges employers face in navigating shifting federal wage and hour regulations, compounded by the transition to a new presidential administration.
Lee’s article focuses on the recent federal court decision vacating the US Department of Labor’s 2024 overtime rule, which had temporarily raised salary thresholds for exempt employees. This ruling reverts the federal minimum salary requirement to 2019 levels, creating compliance uncertainty for employers who had adjusted to the rescinded rule. Amid this volatility, businesses must also contend with stringent state standards like New York’s planned increases in minimum wage and overtime exemption thresholds.
New York’s proactive wage policies demonstrate a commitment to protecting workers, with minimum wage and overtime thresholds rising through 2026. Employers in the state face substantial penalties for noncompliance, as illustrated by scenarios involving audits, lawsuits, and wage compression issues. These examples underscore the financial and operational risks businesses encounter when they fail to adhere to evolving standards, even in cases of good-faith efforts to comply. Employers must therefore balance federal and state obligations, adapting quickly to avoid costly repercussions.
To address these challenges, Lee proposed the “PROTECT” acrostic for employers, emphasizing proactive measures like conducting wage audits, reviewing documentation, and maintaining transparency with employees. The following are the tenets of the “PROTECT” framework:
- Plan for compliance.
- Review documentation.
- Oversee payroll providers.
- Train your team.
- Evaluate pay equity.
- Consult with HR.
- Transparency matters.
Lee said, “By following a structured framework like ‘PROTECT,’ businesses can transform potential compliance challenges into opportunities for growth.” By aligning pay practices with legal requirements and addressing equity concerns, employers can build trust, avoid penalties, and foster a motivated workforce, positioning themselves for long-term success.
Law360 subscribers can read the full article here.