Ready to pay overtime to Exempt Employees? FLSA changes coming soon…

For many employers, upcoming changes to the FLSA rules governing who is exempt vs. non-exempt from overtime (OT) will result in increased payroll costs — either via higher salaries or higher OT. Plan now. Don’t get caught scrambling at the last minute to understand the coming changes and implement a plan — or worse — get caught up in a wage & hour lawsuit because you didn’t properly prepare.

What exactly is changing?

The Department of Labor proposed amendments to increase the salary threshold for the FLSA’s White Collar Exemptions. These proposed amendments include:

  • A new Salary requirement for exempt employees: $970/week ($50,440 annually)
    • Currently the requirement is $455/week ($23,660 annually)
    • This new salary represents the 40th percentile of earnings for all full-time salaried workers throughout the United States
  • A new Salary requirement for “highly-compensated” employees: $125,148 annually (which is tied to the 90th salary percentile)
    • Currently the requirement is $100,000 annually
  • Automatic annual updates to the salary requirement amounts which will be in line with the applicable 40% or 90% thresholds

We recommend reviewing this DOL Fact Sheet on the proposed rule for a thorough overview.

When is this happening?

The comment period has officially been closed. The Final Rule could be published in or before July 2016 and the details of the rule will take effect at least 60 days later.

What do you, as an employer, need to do?

  • Determine which (if any) of your employees may be affected by the new salary requirements (if you are a StratEx client, you can use the Report Creator to run a custom report)
  • Review the average number of hours worked by these employees
  • Analyze the cost of either increasing salaries or paying overtime to comply with the new salary basis rule
  • Reach out to your StratEx HR Account Manager to discuss how the proposed changes might affect your company
  • Update position’s Job Description if it is changing its’ exempt vs. non-exempt status

By following these steps (soon!), your company can be fully prepared to act when these changes to the FLSA law go into effect.