Earlier today (March 7, 2019), the U.S. Department of Labor announced new proposed regulations (.pdf) that would increase the minimum salary for employees to qualify for the Executive, Administrative, and Professional exemptions under the Fair Labor Standards Act to $679 per week, equivalent to $35,308 per year. This is an increase from the current minimum
As the holiday lights start to fade, we come to one of the most anticipated times of the year – bonus season!
Such a happy time. Who doesn’t love getting a bonus, and what employer doesn’t like rewarding good performance with some extra monetary recognition? Bonuses are great, but keep in mind that they also…
Q. Our company’s busy season is coming up, meaning we will be asking employees to work longer hours. Our non-exempt employees will all receive overtime pay when they work more than 40 hours in a week. Some of them will actually end up earning more per week than some exempt employees. We would like to…
Q. Our organization has a policy of paying employees who perform certain kinds of work outside of regular business hours at 1-1/2 times their regular hourly rates. Do we have to pay additional overtime pay for these hours?
A. Maybe. The Fair Labor Standards Act requires employers to pay overtime at 1-1/2 times an employee’s…
President Trump has had a busy week since his inauguration: ordering construction of a wall, starting to unwind the ACA, arguing with the media about how many people attended his inauguration – the list goes on. One thing that he has not yet gotten to is the U.S. DOL’s stalled overtime exemption rules. Right now…
This is a post I certainly didn’t expect to be writing even 12 hours ago, but now that the results of the election are clear, it’s time to give some thought to what lies ahead under the forthcoming Trump administration. Details will of course start to emerge over the next couple of months, but I…
Since the U.S. DOL published its new overtime exemption rules, several people have asked me how one goes about converting a salary to an hourly rate that will give employees about the same amount of pay once overtime is factored in. There are really two parts to this calculation – one quite simple, the other a bit harder.…
Continue Reading Converting Salary to an Hourly Rate
As 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:
Note – This post has been updated to correct a calculation error noted below.
The 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?
In a move that should surprise precisely no one who has been paying attention to current U.S. politics, GOP lawmakers in the U.S. House and Senate introduced legislation to block the U.S. DOL’s anticipated overtime exemption rules, just two days after the DOL sent the final rule to the Office of Management and Budget. OMB review is typically the final stage before publication of a new rule.
The legislation, dubbed the “Protecting Workplace Advancement and Opportunity Act,” would:
- Void the DOL’s new rules;
- Allow the DOL to publish updated rules only after conducting a detailed analysis of the rules’ impact on small business, non-profit and public employers;
- Bar the DOL from adopting rules that provide for automatic adjustments of the minimum salary level without going through a formal notice and comment rulemaking process;
- Require any proposed changes to the “duties” tests for the overtime exemptions to be published and subject to public notice and comment.