A new labor law rule — kicked back by a federal judge last month — that would have made almost four million Americans eligible for overtime pay may still have resulted in higher wages for the workers it was intended to help.
The new legislation would have significantly raised the salary cap under which employees were eligible to earn overtime. In response, some large companies, such as Walmart, gave raises to workers whose pay fell just under the new threshold, making them ineligible for overtime pay. Other companies reclassified salaried overtime-exempt workers as hourly employees, which would make them eligible to earn overtime for workweeks longer than 40 hours.
"There's a whole set of companies that had already communicated to their employees that they were going to change their employment status or give them raises," said Brian Kropp, HR practice leader at CEB. Because the rule was halted only about a week before it was set to take effect, many companies had already made the switch.