NEW DOL REGULATIONS MEAN BIG CHANGES FOR BUSINESSES
In May of this year, the U.S. Department of Labor (“DOL”) issued extensive new regulations that will compel many employers to reevaluate how a significant portion of their workforce is classified and paid. Businesses with salaried employees making less than $47,476.00 annually should begin prepping for a significant change in overtime pay requirements scheduled to take effect on December 1, 2016.
The Fair Labor Standards Act (“FLSA”) is a statutory framework which protects employees, and ensures that non-exempt employees receive a minimum wage and time-and-a half pay for hours worked in excess of 40 hours in a given work week. An employee is exempt from the overtime pay protection afforded by the FLSA if he or she is salaried, makes more than the standard salary threshold set by the DOL, and whose primary duties are consistent with executive, professional or administrative positions--for which there are specific tests.
Under the current regulations, employees who are classified as executive, administrative or professional employees must be paid at least $455.00 per week, equating to $23,660.00 per year, to meet the standard salary threshold required to exempt them from overtime pay. However, under the new regulations, in order to properly exempt executive, administrative and professional employees from overtime pay, they must be paid at least $913.00 per week or $47,476.00 per year. The significant raise in the salary threshold requirement will likely place a burden on businesses in the coming months.
The new DOL regulations force employers to decide how to treat salaried employees who fall below the new threshold salary level. Employers must now evaluate those employees to determine, among other issues, if they are likely to work overtime hours, if the business can withstand the salary increase, or if the hours associated with the position can be reduced. If your business believes that additional employees will be entitled to overtime wages under the new regulations, it will be important to track the time each of those employees performs work. The DOL requires employers to keep accurate and complete time records tracking the number of daily hours worked for all non-exempt employees. This process can be challenging, particularly for an employee who has been historically paid on a salary basis and who tends to work beyond scheduled hours.
Regardless, the new regulations are here to stay, and businesses will have to adjust to incorporate the new standards by December 1, 2016 or potentially face serious legal action and exposure to claims for unpaid wages, liquidated damages, attorney’s fees and court costs.