In the past year, the Department of Labor announced the implementation of new overtime salary rules which increased the minimum salary for an exempt employee from $23,660 to $47,476 that would be implemented in December of 2016. Then, in the past couple of weeks, a Federal judge suspended the new rules over issues of authority.
Culturally, anytime your employees are focusing on their compensation, there is a potentially negative impact on morale. The new regulation, and its subsequent suspension by the Federal court, both might create unintentional side effects that can adversely impact your team. It is a potential distraction for both the management team and the employees.
Now that the regulation has been suspended, managers might be considering going back to old payment structures. Be aware that going back will have another negative impact on your team because they will go back to thinking about their compensation rather than on the goals and objectives of the company. We’ve recommended to some of our clients to move ahead with their planned pay structure changes even though they are no longer required. This is especially important if the changes were already announced to the employees.
If you have implemented or announced a new compensation policy in order to comply with the new regulation, think hard before you reverse direction just because the new regulation has been suspended.