On May 18, 2016, the U.S. Department of Labor (DOL) announced a final rule regarding overtime wage payment qualifications for the “white collar exemptions” under the Fair Labor Standards Act (FLSA).
The final rule increases the salary an employee must be paid in order to qualify for a white collar exemption. The required salary level is increased to $47,476 per year and will be automatically updated every three years. The final rule does not modify the duties test employees must meet to qualify for a white collar exemption.
Employers will need to comply with this rule by Dec. 1, 2016.
ACTION STEPS:
- Employers must become familiar with the new rule and identify which employees will be affected. Employers should reclassify employees as exempt or non-exempt, as necessary, by Dec. 1, 2016.
- Employers should also consider communicating any work schedule changes to affected employees before the date mentioned above.
- Finally, employers should evaluate whether implementing new timekeeping practices and training for managers and supervisors on the new requirements is necessary.
IMPACT ON EMPLOYERS:
Given the significant increase in the salary level requirement, employers will need to increase employee salaries, or re-classify certain employees as either exempt or non-exempt, solely based on their salary level. The DOL estimates that this final rule extends overtime protections to approximately 4.2 million workers who are currently exempt under the white collar rules and clarifies overtime compensation eligibility for another 5.7 million white collar workers and 3.2 million salaried blue collar workers whose entitlement to overtime pay will no longer rely on the application of the duties test.
In addition, because of the short implementation deadline, employers should not delay becoming familiar with the new requirements and implementing any necessary changes into their timekeeping and payroll systems. Employers should also determine whether additional training on modifications is necessary for their managers and supervisors.
Finally, employers should also consider communicating with employees to inform them of how their wages, hours of work and timekeeping practices will be affected.
MORE INFORMATION
Please contact Hausmann-Johnson Insurance for more information on the FLSA and other wage and hour laws.
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