Dear Energy Industry: It is Time for a Compensation Review

Is the energy industry ready for the latest on the compensation front—radical changes to overtime rules effective December 1, 2016?  The industry has had a roller coaster ride over the last five or six years, including in its compensation of employees, and these regulatory adjustments may critically affect continuing energy business and employment, as well.

As the blog I wrote linked here explains (“Christmas in July: Avoiding the Grinch”), now is the time for the industry to prepare for this looming December deadline.

Working with employers in the energy industry over the last few years has been, to say the least, an interesting journey.  From riding high with far-ranging employment searches, to layoffs and reductions and barely keeping company doors open.  The former resulted in insanely high pay for workers, almost without abandon; the latter is a sad reminder that, ultimately, the barrel price dominates the oil biz and all connected to it.

But behind all of those extreme highs and lows and the hand-in-glove employment questions, came another silent specter, the specter of overtime class actions.

No one saw it coming.  Everyone thought what they did was right.  If it wasn’t right, it certainly was darn good pay.

However, the reality is that the compensation paid, whether morally “good” or “bad,” did not include “overtime” as defined by a greater god, the Fair Labor Standards Act.

In the last 4-5 years, the industry has been rocked by hundreds of overtime lawsuits, creating a sea-change in how compensation should be paid.  The litigation has affected the mightiest mega-corporation down to the smallest mom and pop service company.

If the industry (and all business for that matter) is not careful, the newest regulations may have a similar effect in December 2016.  So, now is the time to assess compensation to ensure that employers are compliant with these new regulations, so as to avoid DOL investigation and further litigation, after the 12/01/2016 deadline.

As the “Christmas in July: Avoiding the Grinch” blog describes, the regulations do two things:

• Raise the required salary for exempt workers from $455 to $913 a week (or $47,476 annually); and
• Raise the salary level for “highly compensated employees” from $100,000 to $134,004.

These astounding developments will affect some 4.2 million workers.

The blog, linked here, explains these legal alterations, what energy and all employers must do on this front, and what might be expected in the future.  A list of steps for compensation consideration is linked here as well.

The writer of this blog is Andrea “AJ” Johnson, a Senior Director of Kane Russell Coleman & Logan, P.C. in Houston, Texas, 713-425-7433, ajohnson@krcl.com.  AJ regularly assists employers with wage and hour matters both in litigation and in DOL investigations, and in developing preventative measures and performing compensation audits.