Employment Law Changes on the Horizon in Early 2025
A recent court decision has effectively vacated the Department of Labor’s rule that was set to increase employee salaries to $58,656 annually on Jan. 1, 2025. This requirement is no longer in place. Employers no longer have to comply with that salary threshold for their FLSA overtime-exempt employees. References to that date below were made prior to the court’s decision.
This week, we are taking a second to consider the impending deadlines for a number of employment law changes to salary thresholds for exempt employees under the Fair Labor Standards Act (FLSA), changes to paid sick time under the new Earned Sick Time Act and changes to Michigan’s minimum wage requirements. I’ve covered these topics previously, so be sure to check out previous Take a Second blog posts for the detailed rundowns. As we continue to barrel towards the end of the year and head into 2025, it’s pertinent to provide some reminders and additional information. So, let’s jump right in!
New Salary Threshold for Exempt Employees (FLSA)
In April of this year, the Department of Labor (DOL) announced changes to the salary threshold for FLSA exempt employees. In their announcement, the DOL required employers to adjust the minimum salary for their FLSA-exempt employees on two dates: the first being July 1, 2024, and the second being Jan. 1, 2025. Employees whose salaries were under the required salary thresholds to remaining FLSA-exempt either need to be adjusted to the new required salary amount or employers would need to reclassify those employees from exempt to non-exempt.
In my previous Take a Second blog on this topic, I highlighted the importance of consulting with an attorney if you are considering reclassifying any of your employees. I would once again encourage you to do the same if you are considering this ahead of the next increase deadline (Jan. 1, 2025).
As a reminder, the salary threshold for FLSA exempt employees as of July 1, 2024, was set at $844 per week, which is equivalent to an annual salary of $43,888. On Jan. 1, 2025, this threshold amount will once again increase, this time to $1,128 per week, which is equivalent to an annual salary of $58,656. It is crucial to make a plan to increase your current FLSA exempt employees to at least that amount prior to the Jan. 1, 2025, deadline. Again, if you are thinking about reclassification of an employee(s), I would reach out to your counsel so they can advise you on any potential considerations ahead of making that decision.
New Michigan Earned Sick Time Act Policy
In July of this year, the Michigan Supreme Court ruled that prior legislative action, which enacted the Paid Medical Leave Act of 2018 was unconstitutional. This caused the Court to reinstate the prior language of the Paid Sick Leave Act, a voter-initiated petition, previously adopted by the Michigan Legislature and then subsequently amended to create the current law governing paid sick/medical leave (Paid Medical Leave Act).
With this ruling comes changes that will need to be made regarding how employers provide their employees with paid sick time in accordance with the new law, effective Feb. 21, 2025. MCUL hosted a town hall with Mike Krempa from Holzman Law and Wendy Block from the Michigan Chamber to discuss the issue in September. Following that discussion, it was clear that credit unions are looking for additional guidance on this topic, specifically a model policy.
So, that is exactly what I created in consultation with Mike. This policy is available on the Michigan League InfoSight page for credit unions to utilize. Again, any specific questions regarding modifications or deviations from the policy will need to be discussed with counsel, but we believe this provides a framework for implementing the new requirements under the law.
New Michigan Minimum Wage Policy
Another impending deadline is the required changes again stemming from July’s Michigan Supreme Court decision changing the minimum wage requirement in the state. The minimum wage will increase to $10.56 on Jan. 1, 2025, and then $12.48 on Feb. 21, 2025. These numbers were announced earlier this month by the Michigan Department of Labor and Economic Opportunity.
If any of your team is making less than the amounts listed above, you will need to take steps to raise their pay rate to reflect the new required amounts by the required dates. Another important note is that these amounts will continue to be adjusted annually by the Department of Treasury in accordance with the Michigan Supreme Court ruling. So, to ensure compliance, this is something that your team will need to be aware of and look for the new numbers annually.
Legislative Action Coming?
If you have been following the updates coming from our amazing advocacy team, you might have read that there is a chance of legislative action on several topics, including paid sick time and minimum wage, following the upcoming election. That is true but not something I would rely on. Depending on the outcome of the election, we certainly could see legislative action but what that looks like, and the changes that are able to be agreed to by the legislators, remains to be seen. If I had a crystal ball, I would predict that the legislature will work on addressing and clarifying pieces of both soon to be effective laws, but the timeline for those changes being enacted is anyone’s guess.
To sum it up, there is a lot to do prior to the beginning of the year to ensure you can be compliant with these laws. There is no guarantee that legislative action will take place as it relates to changes to the earned sick time act or minimum wage prior to the implementation date, so we need to prepare as if this will be the law going forward. The good news is that there is still time to make sure you are compliant. So, if you haven’t already, please take some time to discuss the change that will need to be made prior to the Jan. 1 and Feb. 21, 2025, deadlines.
As always, this article is intended for general information only and does not constitute legal advice. If you have any questions about these topics and/or the possible implications, you should contact your attorney for advice.
Hope to see you next time, when we take a second to discuss another legal topic in the financial services industry!
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