The Fair Labor Standards Act (FLSA) is Changing!

Here is what you need to know:

Revised Fair Labor Standards Act (FLSA) overtime rules are expected to roll out in May, to be implemented by employers nationally in July 

All industries will be impacted by the rules, so most employers governed by FLSA will need to analyze their employee classifications and prepare the necessary changes to comply with the new rules.

The Department of Labor has stated that 11 million employees nationally will be impacted by the new rules

The expected changes are as follows:

• The overtime exemption salary threshold will more than double, rising from $455/week or $23,660/year to $970/week or $50,440/year
• Exempt positions which will not increase in salary as result of rules changes: attorneys, doctors, teachers, outside sales personnel
• There will be an automatic annual indexing of the exemption salary threshold level (which will likely result in annual increases), measured by some as yet unknown index, such as changes in inflation
• The Highly Compensated Employee exemption compensation threshold will increase from $100,000/year to $122,148/year and will also be subject to annual indexing 

No changes to the duties tests are expected

State wage and hour laws need to be considered, as the more restrictive of the two (state vs FLSA) will govern the employees of that state

Employers need to immediately start preparing to do the following:

• Identify currently exempt jobs with salaries that fall below the proposed $50,440 threshold for exempt employees 
• Determine which employees will get bumped up to maintain exempt status, and which will be reclassified as nonexempt (where they will be paid hourly and eligible for overtime for hours over 40 in a week – or after 8 per day in California) 
• Update job descriptions to reflect the changes made in exemption status 
• For employees subject to the Highly Compensated standard but below its new proposed compensation level, i.e. between $100,000 and $122,148 per year, determine whether those jobs satisfy at least one of the duties of one or more exemptions 
• For important positions which often result in overtime pay, employers may want to consider hiring more full-time, part-time and/or temporary employees or restructuring their workforce to offset the potential hike in overtime pay
• Job descriptions should be reviewed to identify exempt level work that could be reassigned to other exempt employees
• Timekeeping processes need to be evaluated to ensure they are sufficient for the influx of newly reclassified employees