Get Ready for Overtime Changes
The Secretary of Labor has been asked to propose new FLSA regulations which will likely reduce the number of employees who qualify for exempt status. Although there have been numerous delays in announcing the new rules, it appears they will be announced sometime in 2015.
The most anticipated change is an increase in the $455 minimum weekly salary (or $23,660 per year) threshold for exempt employees. Economists are projecting that the new minimum salary basis requirement will be raised to somewhere between $42,000 and $52,000 per year and that could mean an additional 3.5 million to 6.1 million employees will become non-exempt and eligible for overtime when the new regulations take effect. New regulations may also change some of the job duties tests under the various exemptions.
Since these potential changes will have a substantial impact on employers, preparing for a complete review of exempt classifications and planning for the process should begin now.
As with any FLSA review, there are key steps to consider taking in anticipation of the revised overtime regulations:
Have current job descriptions that accurately reflect the job duties, core functions and responsibilities of each job.
Identify those positions that are currently exempt but considered in the “gray area” because their salary is at the lower end of the exempt salary range and the job duties contain more routine activities that may not pass the current exemption tests.
Make sure Managers and Supervisors have an understanding of the FLSA regulations and make them aware of the proposed regulations so there aren’t any surprises if you are required to reclassify a large number of employees from exempt to nonexempt.
Run some reports to see what the impact would be on your organization if the minimum salary threshold increases to between $42,000 and $52,000 and think about whether you would raise salaries for some employees to maintain their exempt status or change their classification to non-exempt and make them overtime eligible.
Consider your organization’s approach to work schedules and how to pay people who are currently exempt and who may work anywhere between 40 and 50 hours. Will you adjust their schedules to 40 hours to reduce overtime costs or add more employees to cover the workload?
It is clear that changes are coming to the Fair Labor Standards Act (FLSA) and the changes will require a review of exempt classifications to ensure compliance with the law. Planning now will mean you will be better prepared when the new regulations become effective.
© 2015 David Weaver. All rights reserved.
