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Critical Changes to the Fair Labor Standards Act

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You may have heard – but the Department of Labor finally released the proposed changes to the Fair Labor Standards Act last week and it’s not a pretty story for business.

The main issue that will impact your organization will be the increase to an allowable base salary for your employees you consider exempt from overtime today. If the law goes into effect as planned, you will have to pay all salaried employees a minimum of $50,440 per year – and that number will increase annually each year. Employees will still need to meet the criteria of exempt employees, which have not yet been published. In addition, there had been a threshold in the current regulations that provides exempt status to some employees with a salary over $100,000 – that number will rise to $122,148.

The DOL was not shy in stating their goal is to ensure more workers have the right to receive overtime pay at 1.5 times their hourly rate for all hours over 40.

We anticipate the new rules will be effective early 2016 at the latest.

So what should you do now……

1. Look at all employees you currently pay a salary less then the proposed amount. Begin to analyze the amount of time they are actually working in a typical week. If it is a great deal more than 40 hours per week, you may need to raise their salary. If the amount of overtime exposure is minimal, you may elect to convert them to hourly and pay for the time they work over 40 hours.
2. Consider your 2016 budget now. This will impact almost every business in some way. You likely can’t get by with fewer workers – so you’ll need to analyze how this hit to the bottom line can be absorbed.
3. Evaluate your job descriptions to determine if positions are classified properly today. If an employee does make over the new threshold, ensure that their job description is reflective of an exempt position. The current classification can be found here. Today this is not an anticipation that this will change – but who knows!
4. Begin to review your policies on overtime. If you will have more employees that are overtime eligible your policy for overtime work and approval should be clearly communicated to employees and your management team.
5. Consider systems you may need to implement, or capacity increases to your current system, as you have more employees needing to track time worked by the hour.

These are just some initial thoughts to the announcement by the Department of Labor. Click here for the announcement by the DOL. The actual proposed regulation is 295 pages….if you can’t sleep and are just dying to read it, let me know!

I will continue to keep you updated as more information becomes available. I anticipate having an open, complimentary webinar in the next month on the subject – information is still very new and I want to be sure I have all the implications and the proposed timeline before I create a program.

STAY TUNED!

Photo by Steve Snodgrass used under the following license.

3 Comments
  1. Last year there was another Obama / DOL proposed amendment to the FLSA federal minimum wage for employees to $10.10 per hour over the course of a two-year period. It then had to be introduced to Congress and debated. Then it was known as the Minimum Wage Fairness Act. It died in the Senate.

    This is just another proposed amendment that hasn’t even been introduced to congress. Since the Democrat Party has as much clout as it did in 1914. I would expect the same to happen unless everyone loses their minds and decides to amend 75 year old act of congress right before a Presidential election year based on a proposed amendment from an outgoing President.

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