How to Avoid Problems with the New FLSA Overtime Regulations
Yesterday morning (June 30th, 2015) news hit the wire that the Department of Labor (DOL) has officially released changes to the overtime exemption as it relates to the classification of employees under the Fair Labor Standards Act. Back in March, here at Helios we blogged about the (at the time proposed) changes to the regulation with a call to action:
- Determine whether you have current job descriptions that correctly reflect job duties and convey the essential functions and duties of each role, most importantly for exempt positions.
- Identify, any positions that are currently exempt positions that may be at risk of becoming non-exempt with the change of classification. This may include positions which are not performing enough exempt level tasks or which may not have a high enough salary.
- Begin to make budget plans for how to react if the minimum salary increases. Look at headcount to determine if there is a need to have a reduction in workforce if the increase in wage is that significant.
The overtime exemption otherwise referred to as the “white collar exemption” includes the executive, administrative, professional, and outside sales employees' classifications. The three tests under the “white collar exemption” (which simply means exempt from earning overtime pay) are salary level, salary basis and job duties. The new rule will raise the salary level from $455 per week to $970 per week or $50,440 annually. What does this mean? Simply stated employees with a salary of at least $50,440 may need to be classified as non-exempt (eligible for overtime) if the other two tests (salary basis and job duties) do not pass muster upon examination.
If you have not taken the steps to review your workforce classifications, now is the time. With these changes also comes oversight by the DOL’s Wage and Hour Division. The time to consider whether or not you are ready for an audit is before you receive notification from the DOL. Act now to ensure compliance!