On December 1, 2016, employers will need to pay more to benefit from the Fair Labor Standards Act’s (FLSA) so-known as white-colored collar overtime exemptions. To organize for that approaching change, employers have to know whether and how much they’ll be impacted by the brand new overtime exemption rules.
The brand new rules focus mainly around the minimum salary and compensation levels required to entitled to the FLSA’s executive, administrative, professional and computer worker overtime exemptions. Employers can ask the next questions to look for the potential impact from the new overtime rules before time runs out.
What are the employees considered exempt under among the FLSA’s white-colored collar overtime exemptions? If no, you shouldn’t have the greater standard salary levels underneath the new rules. If so, proceed to required.
Do these employees ever work greater than 40 hrs inside a workweek? If no, you shouldn’t have the greater standard salary levels underneath the new rules. If so, proceed to required.
Do these employees earn an income of under $913 each week? (This calculates to $1,826 biweekly, $1,978 semimonthly, $3,956 monthly or $47,476 yearly.) If no, you shouldn’t have the greater standard salary levels underneath the new rules. If so, exemption classifications or compensation practices have to be adjusted before December 1, 2016.
The best adjustment(s) will typically rely on specific conditions, like the quantity of recently-nonexempt employees, their salaries, how frequently they work overtime and just how much overtime they work. Based on their situation, employers might wish to implement a number of the next adjustments.
Increase Salaries. Possibly the easiest and least disruptive adjustment is always to boost the salaries of exempt white-colored collar employees to no under $913 each week. Regrettably, it could also be impractical for a lot of employers. Though some salary increases might be small, others might be greater than double.
Individuals selecting this method must keep in mind that exempt status requires greater than meeting the brand new minimum salary needs. Main work responsibilities remain relevant underneath the new rules and employees still need to fulfill the relevant “standard responsibilities test” to become exempt.
Pay Recently-Nonexempt Employees Overtime Compensation. The choice to growing salaries would be to re-classify these exempt employees as overtime-qualified employees. Individuals working greater than 40 hrs inside a workweek should be compensated 1 1 / 2 occasions your regular rate. Keep in mind that employers must track the daily and weekly hrs labored by all nonexempt employees, such as the recently-nonexempt.
Having to pay overtime compensation might not be an issue for workers who rarely work or who work hardly any overtime. Despite having to pay more for periodic overtime work, it might be less costly than growing salaries. Exactly the same can’t be stated about employees who regularly work or who work lots of overtime. Their overtime pay can also add up rapidly, possibly approaching or perhaps exceeding $913 each week.
Stop Overtime. Recently-nonexempt employees could be prohibited from working overtime. If no overtime is labored, no overtime compensation is needed. This method might be simple, but it might not be easy. Exempt employees typically work greater than 40 hrs inside a workweek because they’ve got more than 40 hrs of labor to complete. The work they do must get done, but another person will need to get it done.
Adjust Personnel, Schedules or Assignments. Individuals who stop overtime might have to make various operational adjustments. For instance, workload distribution and workforce scheduling might need to be adjusted to pay for losing overtime work. In some instances, new employees might need to be hired to compensate for any lost productivity.
Adjust Wages. Recently-nonexempt employees who’re permitted to carry on working overtime of course will finish up getting good money for the similar work load. Reallocating regular wages and overtime compensation is a method to keep your hrs labored and amounts compensated to recently-nonexempt employees largely exactly the same. However, employers might not reduce a worker’s hourly wage underneath the greatest relevant minimum wage (federal, condition, or local) or constantly adjust wages each workweek to control the standard rate.
Employers should not wait too lengthy to begin planning. It requires time to adjust exemption classifications and compensation practices, particularly if they’re substantial or complex. With the publicity, it’s safe to visualize that violations is going to be observed not just by individuals who are influenced by the brand new rules, but through the Department at work too.
To safeguard from the uncertainty and confusion all around the new rules, employers will benefit from getting Employment Practices Insurance to safeguard against various employment-related claims. Limited coverage for wage and hour claims might be available.
Employers should discuss the brand new overtime exemption rules with HR, payroll/accounting, supervisors and managers. Specific wage and hour training ought to be considered. Please call us if you’d like more details about get yourself ready for the brand new white-colored collar overtime exemption rules.