Will the Revised Overtime Law affect you?

 The Department of Labor has publicized a proposed revision (revised overtime regulations) to the Fair Labor Standards Act (FLSA). From the perspective of an Employee, this is the law that defines which positions (employees performing the position) must be paid premium pay (time and one-half) for hours worked over forty (40) in a specified work week.

To be exempt (exempted from the premium pay requirement) the employee must meet two requirements: a duties test and have a minimum weekly pay rate of $455.00 or greater.

The proposed law which is announced to go into effect in 2016 raises the minimum pay level to be exempt from $455 per week to $921/week ($47,892.00/ year. This is a major revision and has the potential to cause the large numbers of employees currently classified as exempt to be reclassified as non-exempt.

What actions and preparations will employers be implementing in preparation for the new law?

  1. Evaluate the job functions for all employees currently classified as exempt to determine if they are correctly classified.
  2. Identify all employees currently classified as exempt and note all that are below the proposed new threshold and no longer meet the exempt test.
  3. From #2 above develop action some action models to determine if a salary/wage adjustment of a reasonable amount is the solution to keep some employees classified as exempt. What will be the cost and what are the alternatives?
  4. For employees most likely to be reclassified, how many hours are they actually working per week, is this really required, is it seasonal or temporary, etc?
  5. What will be the effect of reclassification for the employee: punch a time clock, lose any benefits or perks?
  6. If an employee is reclassified to non-exempt, what method will I use to determine an hourly rate?
  7. How much of this do I share with employees today?

What concerns/thoughts will employees be experiencing?

  • Will I qualify for overtime payment?
  • Will my salary/base pay be adjusted?
  • How would I feel about punching a time clock if I am reclassified?
  • Will I be required to do more in less time to avoid or minimize hours worked over forty?
  • Will anyone discuss this with me?
  • What should I tell the employees that work for me?
  • Should I respond if my boss texts me after hours or am I off the clock?

In the next blog we will discuss some specific action plans an employer may want to consider and how to involve the employees in the process.

Comp/Benefits, Federal Regulations/laws