For staffing firms and employers, 2024 brought several major shifts that impacted how workers are classified, compensated, and managed. Let’s break down the most significant regulatory changes, how they evolved, how they were received, and where they stand today.
Salary Thresholds for “White Collar” Exemptions
Original Rule:
The Fair Labor Standards Act (FLSA) set the salary threshold for “white collar” exemptions—covering executive, administrative, and professional roles—at $35,568 per year ($684 per week).
How It Changed:
In 2024, the Department of Labor (DOL) announced two planned increases:
- First increase: $43,888 per year, effective July 1, 2024.
- Second increase: $58,656 per year, scheduled for January 1, 2025.
Reaction:
Employers worried about rising labor costs and operational challenges, while employee advocates welcomed the changes for promoting fair compensation.
Where did we land?
On November 15, 2024, a federal judge in Texas vacated the DOL’s rule, stating it exceeded the agency’s authority by prioritizing salary over job duties for exemption status. Consequently, the salary threshold reverted to the previous level of $35,568 per year.
Federal Contractor Minimum Wage Mandate
Original Rule:
In 2021, Executive Order 14026 set a $15/hour minimum wage for employees working on federal government contracts, with annual inflation-based increases.
How It Changed:
In September 2024, the DOL announced a new rate of $17.75/hour, effective January 1, 2025.
Reaction:
Supporters applauded the raise for ensuring fair pay, while opponents, including some states and contractors, criticized it for potentially raising project costs and reducing competition, claiming executive overreach under the Procurement Act.
Where did we land?
The rule is still active, but legal challenges have resulted in a circuit split:
- The Ninth Circuit questioned its legality.
- The Fifth Circuit upheld it.
The rule’s future remains uncertain as further court decisions and potential administrative changes loom.
Independent Contractor Classification
Original Rule:
A 2021 rule (from the Trump Administration) made it easier to classify workers as independent contractors by focusing on two main factors: control over work and opportunity for profit or loss.
How It Changed:
The 2024 rule replaced it with a six-factor “economic realities” test, making it harder to classify workers as contractors. The factors consider relationship permanence, control level, and whether the work is core to the business.
Reaction:
Workers expressed concerns about the potential loss of flexibility and fewer job opportunities. Businesses worried about higher costs and the complexities of maintaining compliance. On the other hand, worker advocacy groups praised the update, highlighting its role in protecting workers from misclassification.
Where It Stands Now:
The rule remains in effect, but legal challenges persist, with appeals pending. A change in administration could potentially reverse the rule.
Managing the Rollercoaster with an EOR
For staffing firms, keeping pace with frequent regulatory changes is like riding a rollercoaster without a harness—wild and risky. Wage mandates, classification shifts, and exemption updates can lead to compliance pitfalls, fines, and project delays.
Partnering with an Employer of Record (EOR) like PayReel can help staffing firms ride out the ups and downs.
An EOR manages compliance, keeping up with evolving regulations, ensuring accurate worker classification and timely, compliant payroll, and streamlines onboarding, letting firms focus on growth by providing tailored examples of how PayReel achieves secure, agile, and scalable workforce management solutions, instead of red tape.
In a world of regulatory twists and turns, PayReel keeps staffing firms on track.
