strategies for responding to the changes in flsa overtime eligibility

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Welcome!

Employer Solutions

Webinar DetailsWebinar DetailsWebinar Details

• Presentation is roughly 1 hour

• All phone lines are muted

• Slide deck and access to video recording will be made available

• If anyone has any questions during this webinar – please type them in your Questions Box located at the bottom of your webinar panel

| Employer Solutions

Webinar DetailsToday’s Presenter

Mark Boutilier | Net@WorkSenior Solutions Engineer

• Over 30 years developing and implementing HR and Payroll solutions• HR Practitioner for over 10 years• Sage HRMS Certified trainer and consultant• American Payroll Association Member

| Employer Solutions

Webinar DetailsWebinar DetailsToday’s Agenda

| Employer Solutions

Review of Changes

Tools for Analysis

Implementation Options

Tools for Monitoring

Net@Work Survival Kit

Webinar DetailsFair Labor Standards Act

| Employer Solutions

US Employers are

required to pay their

employees 1 and ½

times their regular

hourly rate for hours

worked over 40 in a

week

“Duties” Test

Salary Test

“White Collar”

Exemption From

Overtime Provisions

of Fair Labor

Standards Act

Minimum Salary Threshold

Highly Compensated

Employee Salary

AND

Webinar DetailsFinal Rule signed May 18, 2016

| Employer Solutions

Last increase

to FLSA wage

was in 2004.

Webinar DetailsFinal Rule Takes Effect December 1st 2016

| Employer Solutions

Webinar DetailsKey Changes to Salary Test

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• Minimum Salary Threshold increase from $23,660 to $47,476 annually

• Highly Compensated Employees minimum salary increases from

$100,000 to $134,004

• Threshold will be automatically updated every three years

• Nondiscretionary bonuses, commissions or incentive pay may be used to

meet up to 10% of the required salary threshold

• Employers can make ‘catch up’ payments quarterly to meet the threshold

Webinar DetailsAnnual Increase

| Employer Solutions

$47,476 per year

$913 per week

$22.825 per hour

Webinar DetailsThree Tests for Salary Exemption under FLSA

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• Salary Basis Test (unchanged except for 10% bonus)

• Salary Level Test (increased 100% effective 12.1.16)

• Job Duties Test (unchanged)

Critical: All 3 tests must be met to qualify.

Webinar DetailsDuties Test

| Employer Solutions

Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees who are employed in a bona fide:• Executive;• Administrative;• Professional; or• Outside Sales capacity.

Certain computer employees may be exempt professionals under Section 13(a)(1) or exempt under Section 13(a)(17) of the FLSA.

Webinar DetailsFor a deeper dive . . . . .

| Employer Solutions

Webinar DetailsFor a deeper dive . . . . .

| Employer Solutions

Webinar DetailsAnalyse Workforce

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Webinar DetailsAnalysis Tools

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• Benefit Eligibility Rules

• Job Code Configuration

• Employee Census

• Employee FLSA Group Status

• Employee Position in Grade

What is the current status of your workforce?

Webinar DetailsAnalysis Tools

| Employer Solutions

• Benefit Eligibility Rules

• Job Code Configuration

• Employee Census

• Employee FLSA Group Status

• Employee Position in Grade

What is the current status of your workforce?

Webinar DetailsAnalysis Tools

| Employer Solutions

Are your benefit eligibility rules different for Exempt\Non-exempt?

Webinar DetailsAnalysis Tools

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Job Codes by Exempt Status and Salary Grade

Webinar DetailsAnalysis Tools

| Employer Solutions

What is the current status of your workforce?

Webinar DetailsAnalysis Tools

| Employer Solutions

What is the current status of your workforce?

Webinar DetailsAnalysis Tools

| Employer Solutions

Employees by FLSA Grouping

Webinar DetailsAnalysis Tools

| Employer Solutions

Employees by Position in Grade

Webinar DetailsTracking Effected Employees

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• Actual hours worked

• Responsibilities

• Potential for Overtime

Webinar DetailsAnalysis Tools

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Overtime Calculator

Webinar DetailsWhat changes do we implement?

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Webinar DetailsPossible Responses

| Employer Solutions

• Do nothing – salaried employees already meet test or could

with incentives

• Increase salaried employees wages to meet the new test

• Reclassify the employees as hourly\nonexempt and pay

overtime

• Restructure workforce or particular jobs – reassign duties to

keep job duties to 40 hours

What are some possible responses?

Webinar DetailsIncrease weekly wages to $914

| Employer Solutions

• May need to increase again in three years

• Increased wage expense (wages and fringe)

• Pay grade compression

• Resentment on part of co-workers.

Webinar DetailsReclassify Job as Non-Exempt

| Employer Solutions

• Possible overtime expense

• ‘Loss’ of Exempt status

• Retraining and enforcement of timekeeping and overtime

policies

• Possible change in benefit or PTO policies

• Job Sharing or other responsibility reductions to reduce OT.

Webinar DetailsReclassify Job as Salaried \ Non-Exempt

| Employer Solutions

• Possible overtime expense

• Retraining and enforcement of timekeeping and overtime

policies

• Job Sharing or other responsibility reductions to reduce OT

• Greater administrative oversight required.

• Reduced overtime cost.

Webinar DetailsFluctuating Work Week

| Employer Solutions

• Salaried Non-exempt must be paid a regular salary at least the

minimum wage.

• Hours over 40 in a week are paid at the employees ‘regular’

rate times 1/2

• Overtime hours are calculated weekly, regardless of pay

frequency.

Webinar DetailsFluctuating Work Week - Examples

| Employer Solutions

Example 1 – Employee works 45 hours this week

• Weekly Salary $800

• Regular Rate 800/45 = $17.78

• Overtime Premium 17.78/2 = $8.89

• Pay for this week: 800 + (5*$8.89) = $844.45

• Pay under traditional OT: (40*$20)+(5*$30)= $950.00

Webinar DetailsFluctuating Work Week - Examples

| Employer Solutions

Example 2 – Employee works 42 hours this week

• Weekly Salary $800

• Regular Rate 800/42 = $19.05

• Overtime Premium 19.05/2 = $9.52

• Pay for this week: $800 + (2*$9.52) = $819.05

• Pay under traditional OT: (40*$20)+(2*$30)= $860.00

Webinar DetailsFluctuating Work Week - Examples

| Employer Solutions

Example 3 – Employee works 35 hours this week

• Weekly Salary $800

• Pay for this week: $800.00

• Pay under non-exempt: (35*$20)= $700.00

Webinar DetailsFluctuating Work Week Setup

| Employer Solutions

Webinar DetailsWebinar Details

35

Webinar DetailsFluctuating Work Week - Catches

| Employer Solutions

• Administration - What is the employee’s ‘regular rate’ this week?

• Fixed Salary – Fixed means fixed, no deductions of pay for unpaid

time.

• Actual work schedules hours must fluctuate.

• Unpopular with DOL – Don’t look for any breaks if audited

• State Laws – Some states do not recognize FWW as a legitimate

alternative.

Webinar DetailsMonitor Workforce

| Employer Solutions

Webinar DetailsMonitor Tools

| Employer Solutions

• Crystal Reports

• Pay Information Export

• Payroll Year to Date Information

• Alerts

• Employees Hired Below Minimum

• Overtime Paid

• Overtime Paid Dashboard

How are we doing?

Webinar DetailsMonitor Tools

| Employer Solutions

How are we doing?

Webinar DetailsMonitor Tools

| Employer Solutions

New Hires or Promotions below minimum

Webinar DetailsMonitor Tools

| Employer Solutions

Automated Monitoring of Overtime Use

Webinar DetailsNet@Work FLSA Survival Kit

| Employer Solutions

$1100

$500

Free Resources

• Free Resources

• Crystal Reports

• Sage Alerts – Overtime Alerts

• 3 hours of consulting to install and configure Alerts* and Crystal Reports

• Free Resources

• Six Crystal Reports

• One hour consulting to install and configure the reports.

• Links

• Sample Policies

• FLSA Overtime Decision Grid

• Final Overtime Rule Calculator.xls

How can Net@work Employer Solutions help?

*Sage Alerts and Workflow must be implemented

Webinar DetailsUpcoming Seminars

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Webinar DetailsThank You For Attending!

Mark Boutilier | Net@Work

Senior Solutions Engineer

(P) 800-719-3307 Ext 4805

mboutilier@netatwork.com

| Employer Solutions

800-719-3307

www.netatwork.com

netatwork.com/blog

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