February 23, 2024
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Judge’s block of federal overtime exemption rule great for California employers


Henry Dubroff

Henry Dubroff

It’s a rare event when a federal rule sets a higher pay standard than worker-friendly California.

That’s part of the reason why I wondered whether a Department of Labor mandate to sharply raise the level for overtime exemption to $47,476 a year on Dec. 1 amounted to a war on small businesses.

On Nov. 22, federal Judge Amos Mazzant issued a nationwide injunction that blocked the Department of Labor rule just a week before it was to take effect.

For California employers, according to labor lawyer Jeff Dinkin at Stradling, the new minimum exempt salary will rise to $43,850 on Jan. 1 as the state’s minimum wage is raised to $10.50 per hour from $10 per hour.

The California minimum for exemption is twice the minimum wage, perhaps a more sensible standard if it was applied nationwide.

A number of states had sued the Department of Labor over the rule, which was established by executive order.

They argued the new standard needed legislative approval and Mazzant, whose court serves the Eastern District of Texas, said there was a likelihood the plaintiffs might prevail in a trial. The incoming Trump administration will probably rescind the order as part of its bid to overhaul business regulation.

Had it gone into effect, the new standard would have created a situation where exempt salary levels would have yo-yoed back and forth between federal and California levels, creating an administrative nightmare, particularly for small and medium-sized employers.

Now there is a less disruptive path forward for California employers and workers. But with a $15 per hour minimum wage on the horizon and new state overtime rules for farmworkers, the state will be far less competitive when it comes to labor costs.

• Contact Editor Henry Dubroff at hdubroff@pacbiztimes.com.