What Impact May FLSA Reform Have on Your Company?
© Beth Casey, Advantage Human Resourcing®
The Wage and Hour Division of the U.S. Department of Labor recently proposed major revisions to the Fair Labor Standards Act (FLSA). If implemented, it is estimated that eligibility for overtime pay will be:
- Guaranteed for 1.3 million more workers;
- More certain for an additional 10.7 million workers; and
- Lost by approximately 640,000 workers.
This could mean significant changes to your company's exempt/non-exempt classifications, payroll expenses, and management practices. And because both exempt and non-exempt employees faced with a status change may be resistant, a well-planned communication and change management strategy will be key to a successful transition.
Most notably, the proposal:
- Raises the income threshold for automatic non-exempt status.
- Consolidates the existing "short" and "long" tests into a set of criteria for each exemption category.
- Replaces the "less than 20 percent" requirement with a broader "primary duties" provision, thereby eliminating the need to calculate the amount of time an exempt employee spends on non-exempt work.
- Eliminates the imprecise - and difficult to substantiate - "discretion and independent judgment" requirement.
- Establishes a new "highly-compensated employees" category with less stringent exemption requirements.
- Allows "pay-docking" of exempt employees for disciplinary suspensions of one day or more.
Below are some specifics, broken down by salary range:
- Less than $22,100 per year - Non-exempt (eligible for overtime), regardless of duties
- Between $22,100 - $65,000 per year - Exempt (ineligible for overtime) if they fall into one of the following categories:
- Executive employees - (1) Have a primary duty of managing the enterprise or a recognized department or subdivision, (2) regularly direct the work of two or more employees, and (3) have the authority to hire or fire other employees or have particular weight given to their suggestions with respect to hiring, firing, promotions, or other status changes.
- Administrative employees - (1) Have a primary duty of performing non-manual work related to the management or general business of the employer or the employer's customers, and (2) hold a "position of responsibility" in which the work is either of substantial importance or requires a high level of skill or training.
- Learned Professional employees - Have a primary duty of performing non-manual work requiring knowledge of an advanced type of science or learning. The acquisition of this knowledge is no longer assumed to be the result of a traditional college curriculum; rather, alternative means such as technical training, on-the-job experience, etc. are also recognized sources of such expertise.
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