The changes to the FLSA overtime rules for white collar exempt employees and highly compensated employees amendment was finalized on May 18, 2016. The main change was the increase of the salary threshold to be considered Exempt from $23,600 annually to $47,470 annually ($913 per week).
This change is expected to affect approximately four million workers whose position classification will need to be changed from Exempt to Non-Exempt. All employers should be analyzing their workforce to identify all Exempt employees who are earning near the new salary threshold. The analysis accomplishes two things:
1) Make sure that there is an action and communication plan for any employee that needs reclassification,
2) Forecast of potential financial/budgetary impact of increased overtime costs.
Compliance by the December 1, 2016 deadline is extremely important. Considering the 400% increase in FLSA lawsuits coupled with the number of workers this rule change affects, failing to comply will undoubtedly open an employer to potential wage and hour risks. These risks will lead to back pay requirements, penalties and lawsuits and possible meal and break requirements (depending on the state that your business is located).
Will you need better processes and systems for timekeeping and labor management to monitor work hours and control overtime costs? Asking the right questions about the organization during this process will identify opportunities for improvement and result in better change management. Finding better ways to automate time tracking for the employees, for example, to streamline scheduling and approvals for managers and simplify reporting for HR and Management, will lead to better outcomes and minimize compliance risk during this transition.
