The Department of Labor Released the New FLSA White Collar Overtime Exemption Rules

The New Rules Take Effect December 1, 2016

On May 18, 2016, the U.S. Department of Labor (DOL) announced the publication of a final rule amending the white collar overtime exemptions to the Fair Labor Standards Act (FLSA). The final rule increases the threshold salary for the exemption to $913 per week - $47,476 per year.

The final rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The final rule makes no changes to the duties tests for both standard and HCE positions.

For complete details and an in-depth understanding of rules CLICK HERE

You Should Take Action Now!

Although these changes do not go into effect until December 1, start planning for compliance now. An important component of any plan is the ability to accurately track employee hours worked.  If you’re not already using a time and attendance system, contact Primepoint for assistance.  For details about Primepoint’s time and attendance options CLICK HERE.

Once you have time tracking in place consider your options, which include raising pay to meet the new exemption thresholds, reducing workloads for individual employees who regularly work more than 40 hours per week and whose jobs will be reclassified as overtime eligible to reduce overtime payments, adjusting salary budgets to allow for additional overtime pay, and carefully planning your communications strategy for announcing the changes you will be making.

Begin your analysis by:

  1. Identifying which employees regularly work more than 40 hours per week and quantify how many overtime hours they are working.
  2. Determining exempt positions where employees currently earn less than $47,476.
  3. Identifying your pay strategy and modeling scenarios where you increase the salary of these employees above the new salary level to maintain their positions as exempt, reducing salaries for newly reclassified nonexempt employees, and calculating the additional overtime the newly reclassified nonexempts may be earning.
  4. Analyzing work requirements and duties for employees who are reclassified as nonexempt, establishing overtime restrictions and hourly reporting requirements.
  5. Analyzing your benefits and paid time off structures to determine whether changes need to be made as the employee transitions from exempt to nonexempt status.
  6. Planning your communications strategy so that impacted employees will understand the changes and expectations going forward.