New White Collar Overtime Exemption Rules Are Coming, Now What?


On December one, 2016, companies will have to fork out far more to get advantage of the Honest Labor Standards Act’s (FLSA) so-identified as white collar additional time exemptions. To get ready for the approaching transform, companies require to know whether or not and to what extent they will be impacted by the new additional time exemption restrictions.

The new procedures target primarily on the minimum income and compensation levels wanted to qualify for the FLSA’s government, administrative, qualified and computer system employee additional time exemptions. Companies can ask the pursuing queries to establish the opportunity affect of the new additional time procedures prior to it can be as well late.

Are there any staff categorised as exempt underneath 1 of the FLSA’s white collar additional time exemptions? If no, you ought to not be impacted by the better typical income levels underneath the new procedures. If certainly, transfer on to the subsequent problem.

Do any of these staff ever function far more than forty several hours in a workweek? If no, you ought to not be impacted by the better typical income levels underneath the new procedures. If certainly, transfer on to the subsequent problem.

Do any of these staff receive a income of considerably less than $913 for each 7 days? (This performs out to $one,826 biweekly, $one,978 semimonthly, $three,956 monthly or $47,476 yearly.) If no, you ought to not be impacted by the better typical income levels underneath the new procedures. If certainly, exemption classifications or compensation procedures require to be adjusted prior to December one, 2016.

The most acceptable adjustment(s) will typically count on specific instances, this kind of as the number of recently-nonexempt staff, their salaries, how frequently they function additional time and how substantially additional time they function. Dependent on their predicament, companies may possibly come to a decision to put into action 1 or far more of the pursuing adjustments.

Improve Salaries. Perhaps the simplest and least disruptive adjustment would be to improve the salaries of exempt white collar staff to no considerably less than $913 for each 7 days. Sadly, it may possibly also be unrealistic for a lot of companies. While some income boosts may possibly be small, some others may possibly be far more than double.

These selecting this selection should remember that exempt position necessitates far more than conference the new minimum income necessities. Main work duties stay applicable underneath the new procedures and staff however have to fulfill the applicable “typical duties take a look at” to be exempt.

Fork out Recently-Nonexempt Personnel Additional time Payment. The different to raising salaries is to re-classify these exempt staff as additional time-suitable staff. These doing work far more than forty several hours in a workweek should be compensated 1 and a fifty percent situations their common rate. Keep in mind that companies should observe the day by day and weekly several hours worked by all nonexempt staff, including the recently-nonexempt.

Having to pay additional time compensation may possibly not be a issue for staff who almost never function or who function pretty minor additional time. In spite of shelling out far more for occasional additional time function, it would however be considerably less highly-priced than raising salaries. The exact same are unable to be stated about staff who regularly function or who function a lot of additional time. Their additional time fork out can add up immediately, maybe approaching or even exceeding $913 for each 7 days.

Prohibit Additional time. Recently-nonexempt staff can be prohibited from doing work additional time. If no additional time is worked, no additional time compensation is needed. This selection may possibly be straightforward, but it may possibly not be easy. Exempt staff typically function far more than forty several hours in a workweek simply because they have far more than forty several hours of function to do. Their function should however get done, but anyone else will have to do it.

Modify Staff, Schedules or Assignments. These who prohibit additional time may possibly have to make numerous operational adjustments. For example, workload distribution and workforce scheduling may possibly require to be adjusted to compensate for the reduction of additional time function. In some instances, new staff may possibly require to be hired to make up for any missing efficiency.

Modify Wages. Recently-nonexempt staff who are authorized to go on doing work additional time as usually will conclude up getting far more cash for the exact same quantity of function. Reallocating common wages and additional time compensation is a way to hold the several hours worked and quantities compensated to recently-nonexempt staff mainly the exact same. Nonetheless, companies may possibly not lessen an employee’s hourly wage underneath the optimum applicable minimum wage (federal, point out, or area) or continually regulate wages each individual workweek to manipulate the common rate.

Companies should not wait around as well prolonged to get started scheduling. It can take time to transform exemption classifications and compensation procedures, notably if they are considerable or elaborate. With all the publicity, it can be protected to suppose that violations will be observed not only by all those who are impacted by the new procedures, but by the Department of Labor as well.

To protect against the uncertainty and confusion bordering the new procedures, companies may possibly advantage from obtaining Work Tactics Legal responsibility Insurance to protect against numerous employment-relevant claims. Constrained coverage for wage and hour claims may possibly be obtainable.

Companies ought to discuss the new additional time exemption procedures with HR, payroll/accounting, professionals and supervisors. Specific wage and hour instruction ought to also be regarded. Be sure to get hold of us if you would like far more facts about planning for the new white collar additional time exemption procedures.

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