With December 1st being only weeks away, many employers are still scrambling to ensure that they have all their employees properly classified as either exempt or non-exempt. As companies work through this process there are several questions that must be answered when it comes to FLSA.
What employees are most directly affected?
If you have associates that currently make less than $22.82 per hour ($47,476 annualized based on a 40-hour work week) you will need to offer them overtime pay for any hours worked over 40 in one week.
This salary is a significant increase from the original threshold of $23,660 established in 2004.
How I determine my organization’s strategy?
If your organization is having difficulty determining the financial impact of the decision to raise salaries, we recommend having your employees track their time for several weeks, or calculate on average how much overtime the work in any given work week, and compare this amount to the new threshold.
For some of your employees, adjusting their salaries to $47,476 or higher and keeping their exempt status will be the best option. For others, establishing an effective post-FLSA implementation policy for timekeeping and overtime management will be the effective solution.
When should all changes be in place?
December 1, 2016 is the deadline for FLSA compliance. There will be increases to the salary thresholds every three years going forward and will be announced by the DOL as each due date arrives.
What if I have employees who are paid commissions or bonuses in addition to their salary?
Employers may use non-discretionary bonuses, incentives, and commissions to satisfy up to 10% of the salary threshold requirement.
Understand that if you are using this in your calculations, that the employee must be guaranteed those funds.
What are some resources I can use to help navigate this process?
The Department of Labor has released several white papers outlining the provisions within the new FLSA change.
Overtime fact sheet
Human Technologies has also enlisted the help of several attorneys to guide us and our clients through implementation of changes.
Employment Law attorney Chase Samples conducted a Friday Morning Coffee discussion that can be viewed here.