In early 2016, the Department of Labor announced an update to overtime regulations that will make some currently exempt employees eligible for overtime pay later this year. The new Fair Labor Standards Act overtime rules state:
- Workers who do not earn at least $47,476 a year ($913 a week) will have to be paid overtime, even if they are classified as a manager or professional. Salaried employees are not exempt from this new rule.
- The Department of Labor will increase the salary threshold noted above every three years.
- Employers must comply with the new regulations by December 1, 2016.
So what you should you do now? Here are some initial steps you can take to get a handle on structural and budgetary impact of these changes:
- Identify employees who will need to be reclassified, i.e. current employees who are exempt but paid less than $47,476 annually or raise salaries up to $47,476 or more to maintain exemption.
- Determine the number of hours these employees work. This seems simple but exempt employees are not required to track their hours, and therefore, employers may not be fully aware of the hours an exempt employee is working.
- Identify how much time managerial employees are spending on particular tasks. Review job descriptions and tasks of impacted positions to determine if certain exempt tasks may be reassigned or maintained with the current position.
- Consider how pay changes or other changes in job assignments may impact your organization. Will you need to make process or structural changes to accommodate, for example, exempt and nonexempt employees who will have the same job title? Will benefits need to be changed? Policies?
- Develop administrative plans to ensure compliance when the regulations become official. Analyze whether any company policies, including policies that only apply to managers and pay policies, will be impacted and need to be changed.
- Check your time-keeping methods and ensure they are sufficient for the additional employees who will now be required to use it. Accurate data collection will be an essential part of complying with the new FLSA overtime rule changes.
- Lastly, and most importantly, don’t hesitate to seek legal counsel to ensure compliance and to help understand DOL regulations and classification changes. The rules are complex and there are serious financial consequences if you are found to be in violation of them.
If you have any additional questions, you can visit the links below, or contact Angela Lewis or Ansley Crawford at 706-722-5337.
Department of Labor Overview Video: https://www.dol.gov/featured/overtime
Department of Labor FAQ’s: https://www.dol.gov/WHD/overtime/final2016/webinarfaq.htm