Are You Prepared for Looming Overtime Rules?

As business owners and HR professionals, we need to be paying close attention to developments on the proposed rulings to overhaul the current exemptions under the Fair Labor Standards Act – FLSA.

The U.S. Department of Labor has proposed a rule to increase the standard salary level for executive, administrative and professional exemptions and the minimum total annual compensation level of the “highly compensated employee” exemption under FLSA.

Under the current proposal, the salary limit for workers eligible for overtime pay would increase from $23,660 to $50,400. This change in amount would obviously impact millions of U.S. workers.

What do you need to do to prepare? While the regulations may not be final until late June or July 2016, employers need to pay attention to how their employees are classified now. Should they be reclassified as non-exempt and paid overtime, or should they receive a raise to meet the new threshold requirement?

In the proposed changes, the DOL clearly ties the changes to the salary. It did however, leave the door open to changes at some point that are currently tied to the duties test. Currently, exemptions are based on the duties an employee performs from day-to-day and determination as to whether or not they fall into the executive, professional or administrative exemptions.

The DOL is asking for comments about a percentage threshold test when evaluating whether the employee is performing duties that are actually exempt or non-exempt.

While “full-time” for health insurance regulations is 30 hours per week, for purposes of payroll employers need to ensure that any work exceeding 40 hours per week, or 8 hours per day in some jurisdictions, is paid at the appropriate rate.

There is no final ruling yet, but the time to prepare is now.