Human Resources, Compliance, Compensation

Other Business Impacts of the Proposed FLSA Changes

Julie Bingham
January 26, 2016

Are you ready for the proposed FLSA changes in 2016?

A few things you might not have thought about regarding proposed changes to the Fair Labor Standards Act

On June 30, 2015 the Department of Labor (DOL) released its proposed changes to the Fair Labor Standards Act (FLSA) overtime regulations. If enacted, it’s reported that "the proposed rule would more than double the salary level under which employees qualify for overtime pay when they work more than 40 hours in any given week; the current threshold of $455 per week/$23,660 annually would be adjusted to 2016 estimates of about $970 per week/$50,440 annually."

The proposed regulation came out of a 60-day "comment period" that ended on September 4, 2015 and has since been in a "wait and see period." Final regulations may be different than what has been proposed, but most anticipate it will not be significantly different. A final ruling will likely not be made until the middle of 2016; more information regarding your options and what to do next can be found in this compliance alert.

Here are a few things that might impact your organization that you haven’t thought of yet:

Paid time off programs

Many employers have different paid time off programs for exempt and non-exempt employees. If you do, we recommend you evaluate which positions will likely move from exempt to non-exempt and ensure the objectives of that program are still being met based on the duties and expectations of the positions in each group.

Work hours

Review your employee handbook and pay policies to confirm when the work week starts and ends, and how you define “work hours.” Evaluate if there are unique aspects of the positions that will likely change from exempt to non-exempt and ensure the work hours expectations still make sense. How will you handle checking emails and messages at nights or on the weekends? If a position is non-exempt, time spent checking emails should be paid and those hours will count towards overtime calculations.

Travel policy

You may have positions that are currently exempt but are changing to non-exempt, and they may travel a lot. Be sure your travel policy is explicit about how and when “the clock starts and ends” and make sure your policy is compliant—there are a lot of unique rules and regulations regarding travel and they can vary state by state.

Health, welfare, and retirement programs

Many health, welfare, and retirement programs include a value or benefit that is tied to a salary amount, or a “multiple of salary.” Review your plan documents to ensure you understand how “salary” is defined and if it includes overtime hours. If it does, partner with your finance team to make sure you have accurately accounted for the cost of these programs.

We don’t recommend making any changes until the final rules are released; there could be wide variation between proposed and final rulings. However, it is never too soon to start planning and developing an implementation plan. Once the final ruling is released you will not have a lot of time to get into compliance.

How prepared are you for these changes? We'd love to learn how Click here to take our survey about impact and strategy at your organization.