Top 5 Takeaways From Webinar on Final DOL Overtime Exemption Rule

Posted in *New Exemption Rules, Exemptions, Overtime, Webinars

Thank you to those who attended today’s webinar, “New DOL Overtime Exemption Rules – What You Really Need to Know Now.”  We hope that everyone enjoyed the presentation and learned information that will assist in getting your organization ready for compliance.

For those unable to attend, here are five key takeaways from the presentation:

  1. Employers must be in compliance with the new overtime rule by December 1, 2016 (but also check state law for any notice requirements related to change in compensation)
  2. New minimum salary level is $913 per week or ($47,476 annualized), with salary increases every 3 years
  3. Identify employees who are at or below the new salary level and decide whether you will increase the salary to meet the threshold, restructure the job or re-classify the position as non-exempt
  4. Review, update and provide training on wage and hour policies
  5. Prepare a communication plan for any changes

As always, please contact us if you have any questions.

The New FLSA Exemption Rules and Higher Education

Posted in *New Exemption Rules, Higher Education

iStock_000015026880XSmall.jpgAs we previously reported, the Department of Labor has now issued its long-anticipated final overtime exemption rules for white collar workers. In addition, the DOL published more detailed guidance for higher education institutions (.pdf) seeking to comply with the new obligations. As expected, the compensation adjustments mandated by the new rules require substantial effort to balance college and university budgetary constraints, workforce morale concerns, and legal compliance obligations in the next several months.

The DOL estimates that the new rule will result in approximately 35% of all current full-time, salaried workers being eligible for overtime based on their salary level alone. At the same time, increasing so many positions’ salaries to meet the new $47,476 threshold creates substantial concerns with salary compression on campus for positions already above that threshold.  To address such concerns and to minimize the need to comply with future increases of the FLSA salary threshold, many institutions of higher education are likely to seek to convert positions to non-exempt status; at the same time, they will need to address employee-morale concerns related to such a conversion and diligently manage the number of hours or methods of compensating for overtime wherever possible for budgetary reasons.

As schools determine the best approach for seeking to adjust to the new rules, the guidance issued yesterday as well as a white paper that we prepared earlier this year offer ample advice specific to higher education institutional needs and concerns.  Examples of key components of the guidance include the following:

Continue Reading

Paying a Fixed Salary for a Fluctuating Workweek - Or, How To Pay Half-Time Overtime

Posted in Overtime

iStock_WageIncrease.XSmall.jpgThe impending increase in the minimum salary for the executive, administrative and professional exemptions under the FLSA has many employers looking for ways to manage overtime costs for newly-reclassified employees. As part of that search, you might have heard of this idea called the “fluctuating workweek method” for calculating overtime as one alternative that can yield major savings. So what is this method, and how does it work?

Continue Reading

Webinar: The New Overtime Rules for Executive, Administrative and Professional Employees Are Here - What You Need to Know Now

Posted in *New Exemption Rules

FRANCZEK RADELET WEBINAR

Date: Monday, May 23, 2016
Time: 12:00 – 1:00 p.m. CST

REGISTER NOW

Please join us for a webinar lead by William R. Pokorny and Staci Ketay Rotman as they give us an overview of the U.S. Department of Labor’s new overtime rule for white collar employees. This rule affects both public and private employers and has far-reaching applications in nearly every industry across the country.

Employers must prepare to address any potential employee misclassification before the rule becomes effective on December 1, 2016.The webinar will discuss:

– The background leading up to the new rule
– What is covered by the new rule
– What did not make the cut
– How to prepare for implementation

REGISTER NOW

New Rules Announced: $47,476 Minimum Salary, Effective 12/1/2016

Posted in *New Exemption Rules, Exemptions
Video announcing the new overtime rules, posted by the US DOL.

Video from the US DOL website, promoting the new overtime exemption rules.

Late yesterday the White House and Department of Labor released key details of the new FLSA overtime exemption rules for white collar workers. The final rules themselves have just been released this morning.  We are still digesting 500-plus page final rules, but the key points are as follows:

Effective Date: December 1, 2016. Note that this is a Thursday, so employers will need to make changes for the payroll period in which December 1 falls.

Minimum Salary: $913 per week, or $47,476 annually. This is slightly less than the $970 per week ($50,440 annually) originally proposed, but still more than double the current $455 per week.

Bonuses and Commissions May Now Be Included: In a somewhat surprising concession to employers, the new rules will allow non-discretionary bonuses, incentive payments and commissions to count for up to 10% of the minimum salary, provided these amounts are paid at least quarterly.

Highly Compensated Employees: The minimum salary for employees exempt under the “highly compensated” employee exemption will increase to $134,004 from $100,000.

Automatic Updates: The new minimum salary levels will not update automatically every year as originally proposed, but they will be adjusted every three years beginning January 1, 2020. The salary level will be pegged to the 40th percentile of full-time salaried workers in the lowest-wage Census region. For 2020, the DOL estimates that the minimum will go up to $51,168. The minimum for highly compensated employees will be tied to the 90th percentile of full-time salaried workers in the lowest-wage Census region, which the DOL estimates will be $147,524 in 2020.

Duties Tests: The new rule contains no changes to the existing duties tests.

For our Higher Ed and Non-profit clients and readers, this may not be what you were hoping for in a final rule.  Despite rumors that the rules might contain some carve-outs for higher education institutions and non-profits, this does not appear to be the case. The DOL has published guides for higher education, non-profit and government (all .pdf) employers to help explain how these employers might meet their obligations, but there is no indication of any new exceptions in the rules for these groups.

What is the potential impact of this rule? The DOL estimates that the new rule will result in approximately 35% of all full-time, salaried workers being eligible for overtime based on their salary level alone. It further states that the new rule will affect 4.2 million salaried workers. Of these, the DOL projects that 4.1 million will be re-classified as non-exempt and eligible for overtime, while approximately 100,000 will receive a raise so their salary meets the new threshold. The DOL contends that the rule will result in workers receiving an aggregate pay increase of $1.2 billion per year. Of course, many employer groups dispute that number, pointing out that employers are as likely to cut hours, reduce headcount, or make other changes to avoid increased labor costs.

We will provide more detail and commentary once we have a chance to digest the final rules and materials released by the DOL.

Details of New Overtime Exemption Rules Begin To Emerge

Posted in *New Exemption Rules, Exemptions

Bloomberg BNA is reporting (subscription required) that according to a “source familiar with the situation,” the DOL’s new overtime exemption rules will take effect on December 1. The new minimum salary for exempt executive, administrative and professional employees will be $913 per week or $47,476 per year. That’s still more than double the current $455 per week, but less than the original proposal which would have boosted the minimum to a projected $970 per week for 2016, or about $50,440 per year.

According to BNA, instead of adjusting annually as previously proposed, the minimum salary will update every three years. We are still waiting for more details on the measure that will be used for this update.

BNA is also reporting that earlier rumors of a carve-out for higher education institutions were not accurate.

We will update this post as further details emerge.

Update: 

Columbus Dispatch reports that Vice President Joe Biden will announce the rules at Jeni’s Splendid Ice Cream headquarters in downtown Columbus, Ohio.

New FLSA Exemption Rules Coming Wednesday May 18 (so they say)

Posted in *New Exemption Rules

Rumors abound this afternoon that the DOL will release its new overtime exemption rules this Wednesday, May 18, in coordination with an event in Ohio attended by VP Joe Biden and Labor Secretary Thomas Perez. What will the new minimum salary be? Will it be indexed to inflation or some other measure? Will the duties tests change? We’ll know the answers to these questions and more very soon. Probably. Stay tuned everyone!

Can We Have Both Exempt and Non-Exempt Employees With The Same Job Title?

Posted in *New Exemption Rules, Exemptions

As employers try to figure out how to cope with the coming increase in the minimum salary for the executive, administrative and professional employees, some find themselves with job classifications where the salary scale straddles the new line between exempt and non-exempt. Can employers in this situation categorize employees whose compensation falls below the line as non-exempt, while treating those with the same job title but with higher salaries as exempt?

In theory, sure. But it could get complicated.

Continue Reading

Will The New Minimum Salary Be Pro-Rated for Part-Time Exempt Employees?

Posted in *New Exemption Rules

No.

I’ve received this question from several blog readers and clients recently, and on its face it makes some sense. After all, you don’t pay full salary to someone who is only working for you part-time, so it only makes sense that the minimum salary for the executive, administrative and professional exemptions under the FLSA should also be pro-rated based on how many hours an employee works. Right?

Well, not so much.

Continue Reading

New Salary Threshold May Be About $47,000

Posted in *New Exemption Rules

According to a report from Bloomberg BNA, unnamed DOL staffers have stated that the salary threshold in the hotly anticipated FLSA exemption rules will be about $47,000 per year, down slightly from the $50,440 level suggested by the proposed rules published last summer. This is  not an official announcement, so while the statement may well be accurate, we suggest waiting until the rules are actually published before employers take any definite action based on the information.

Other final details of the rules, such as whether and how the salary level will be adjusted from year to year, and whether there will be any changes to the “duties” tests for exempt status, also remain unknown.

The final rules are expected to be published within the next few weeks. Stay tuned!

LexBlog