Taking action on this issue now, might be a good time to make a belated New Year’s resolution for your business.
Hopefully, I haven’t caught you off guard and you’re asking yourself, “What regulations have I missed?”
Well, if you are, let’s cover the Department of Labor’s (DOL) changes to the Fair Labor Standards Act (FLSA) Part 541 Regulations as quickly and concisely as I can.
About the worst thing to be doing right now is nothing. Don’t assume that even though legislators are in the process of seeking changes to the law that you are immune to legal or governmental measures.
Here’s what you should do:
– Review current salary levels of exempt employees and identify those paid less than the new minimum of $455 per week ($23,660 per year).
– Conduct an analysis of the actual, specific job duties of each exempt employee, measured against the new exemption standards.
– Be able to explain why an exemption applies to each exempt employee.
– Review pay practices for all employees.
– Develop a written policy explaining the salary program for exempt employees. See ‘safe harbor’ policy below.
– Distribute a copy of the policy to each exempt employee.
– Develop a clear and specific policy requiring that non-exempt employees record all working time and that all recorded working time (and all time actually worked even if it is not recorded) must be paid.
If you haven’t taken the actions listed above, you may be putting your company at risk – the new regulations became effective almost seven years ago. A review of your pay practices and policies now can enable you to better justify these policies and practices if they are questioned.
The regulations should affect all employers to some degree. Also, some changes, such as the elimination of the sole-charge exemption, and the exemptions of chefs and outside sales people who are also drivers, will impact certain industries, such as the hospitality business.
A ‘safe harbor’ policy protects employers from losing the ability to classify employees as exempt if they make an improper wage decision, such as incorrectly deducting wages from a salaried employee. In the past, such an improper decision could result in the employer losing the right to classify the employee – as well as other employees within that job classification–as exempt. The policy should include a complaint mechanism for employees who feel their wages were improperly computed, and a provision that assures workers their pay will be appropriately adjusted after a complaint has been validated.
While there is some confusion over implementation of the regulations and safeguards, most companies report that they are not reclassifying employees from hourly to non-hourly. But
a recent survey conducted by the HR Policy Association, found that about half of the companies who responded (48 percent) said the new wage-hour law would treat more employees as eligible for overtime, while about the same amount (49 percent) said there would be little or no change.
In the past, a white-collar employee was classified exempt from the minimum-wage and overtime-pay requirements if he or she earned a minimum of $155 a week or $8,060 a year under the ‘long’ test outlined in the old regulations, or $250 a week or $13,000 a year under the ‘short’ test. That salary amount was increased to $455 a week or $23,660 a year under the new standards.
The new rules also specifically remove some blue-collar employees from exempt status, such as emergency responders, and non-managers in production, maintenance, construction and similar occupations.
And of course, here comes the disclaimer – I am not an attorney, so don’t take this as specific legal advice. Consult your attorney. Should you wish a complimentary Exempt Status Assessment Guideline, you can request one by sending me your contact information via the “Contact Us” button at the top with ‘Exempt Guideline’ in the subject line – I’ll email you a copy.