Even if Overtime Rule Falls, Some Employers Will Keep Raises in Place

Even if Overtime Rule Falls, Some Employers Will Keep Raises in Place

After the outcome of last month’s presidential election, the future of the controversial new overtime rule announced by the US Labor Department earlier this year, which would have raised the salary threshold at which employees are exempt from overtime pay from $23,660 to $47,476, was thrown into doubt. Later in November, a federal judge issued an injunction blocking the rule from going into effect, which the department subsequently appealed, but the case will not be decided before president-elect Donald Trump, who has pledged to undo much or all of President Barack Obama’s regulatory legacy, takes office on January 20.

That leaves the fate of the rule up in the air, but many employers have already made adjustments to compensation and scheduling to comply with it—such as Walmart, the nation’s largest private employer, which chose to raise salaries for entry-level managers to put them over the new threshold. Even though the rule did not go into effect as scheduled and may not survive at all, Walmart and some other major employers, including Kroger and Wendy’s, are keeping these raises in place, the Wall Street Journal reported this week:

Companies say they are unwilling to reverse promises they made to raise employee pay, especially after they spent months rearranging job duties and wages. At least one firm said that the approaching rule spurred it to find more efficient ways to use staff, and appears happy with the result. The moves suggest that some Obama-era workplace policies may persist despite challenges from the incoming Republican administration. …

Grocer Kroger, which employs 431,000 workers nationwide, had planned to raise the pay of about 4,500 staffers to comply with new federal overtime rule. Cincinnati-based Kroger went ahead with its plans, raising pay for some managers and supervisors earlier this month, because the company had already told the affected workers that their pay was going to be raised to the salary threshold, said Mike Schlotman, Kroger’s executive vice president and chief financial officer.

These decisions reflect an environment in which companies are taking a more progressive approach toward their employees than governments are, motivated by a talent-driven labor market, the advent of HR as PR, and a growing belief that employee-friendly policies like higher entry-level wages and robust parental leave offerings are actually good for business. Walmart, for instance, has attributed its strong performance this year partly to a decision to invest more in wages and training.