New federal employment rules will be a big change for Montana employers

A new set of rules being promulgated by the United States Department of Labor (DOL) has the potential to cause a major shift in the employment structure for most Montana employers. Unfortunately, it’s a change that many don’t yet know is coming.

The new rules would alter who qualifies to be an “exempt” employee, that is, an employee exempt from tracking hours worked. Today, exempt employees are those who work in administrative, professional, or management roles in the organization and who make at least $23,660 annually.

Exempt employees fill an important role in the workplace—they’re granted more flexible work hours and more autonomy over their schedule. Their roles are more dependent on work outcomes than on hours worked. Sometimes, they’re expected to go beyond normal work hours—for instance a bookkeeper preparing for tax season or a store manager completing the monthly inventory.

For many, achieving exempt status comes with a real sense of accomplishment. It’s a sign that they’ve been given more responsibility in their jobs, and the freedom to no longer have to track hours and “punch the clock.”

But the new rules being proposed by DOL would force many employees who are currently exempt to be reclassified to hourly workers. Specifically, they have proposed to more than double the income threshold from the current $23,660 to $50,440.

Such a sweeping change will affect thousands of workers in Montana, some of whom have been exempt for decades. Those workers will now have to track their hours and be subject to a much stricter work schedule than they are used to.

The change will also drive up personnel costs for employers. That will likely lead to many employers cutting back hours, reducing wages, or trimming their benefits package.

The rule encompasses nonprofit employers as well as those in the private sector, and it’s those nonprofits that will feel the biggest pinch. Unlike for-profit companies, nonprofits have far less flexibility to pass along increasing costs to their clientele. They have tighter budgets, and a higher proportion of workers who will fall under the new $50,440 threshold.

The DOL rules are a one size fits all approach. The income thresholds are the same for low-wage states, like Montana, as they are for higher-income states like New York or California. In other words, employees in Montana are more likely to fall under the income threshold than their counterparts in other states.

This is a very large change for Montana employers, and it’s coming fast. The new rules are expected to be announced in its final form in the next couple of months, from which time employees will have only a couple more months to come into compliance.

But it is not an inevitable change. Due to the detrimental effects the rules will have on employees and employers alike, legislation has begun moving in Congress to block the rules and force DOL to take into consideration the concerns of nonprofit organizations and employers in small states.

This is an issue we need our Congressional delegation unified on. Please join me in urging Senators Tester and Daines, and Congressman Zinke, to support and co-sponsor the Protecting Workplace Advancement and Opportunity Act.

Ronna Alexander is the executive director of the Montana Society of Association Executives.