understanding the new flsa rule - flsa overtime...
TRANSCRIPT
Understanding the New FLSA Rule July 13, 2016
Webinar for Administrators
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Welcome
This discussion is informational only, and is not legal advice.
You should consult with legal counsel for advice about the information
provided today.
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Your Presenter:
David Pearson Head of Human Resources Extensis Group Woodbridge, NJ
David ensures that Extensis Group clients are provided with the latest guidance in employee relations, compensation planning, staffing, performance management, leave management, training and other HR needs.
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Agenda
• The impact of the new rules
• Classifying exempt and non-exempt employees
• Proactive compliance and the cost of non-compliance
• Audit preparation
• Our FLSA Analysis that will help you stay compliant
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The DOL Revised the FLSA Overtime Rules
What it does:
• Regulates overtime and minimum wage for all businesses of all sizes
What has changed:
• Increased exempt thresholds for overtime pay
Who must comply:
• Everyone
Fair Labor Standards Act (FLSA)
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The New Employer Challenge
As of December 1, 2016,
4.2 million additional workers will be eligible for overtime pay.
Photo credit: https://www.dol.gov/featured/overtime
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Fast-Approaching Deadline
You only have
5 months left to be in compliance.
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Changes Affect Classification
Exempt Employees
Salaried employees that are “exempt”
from receiving overtime pay.
Non-Exempt Employees
Most hourly employees that receive overtime
pay after 40 hours of work per week at 1.5 times their
regular rate of pay.
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New Thresholds for Regular Employees
Current threshold less than $23,660
New threshold less than $47,476
Regular Employee Salary
Before Dec. 1
After Dec. 1
Eligible for overtime pay as of Dec. 1: Employees with annual salaries between $23,660 and $47,476
Bonuses and commission
can satisfy at least 10%
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New Thresholds for Highly Compensated Employees
Current threshold less than $100,000
New threshold less than $134,004
Before Dec. 1
After Dec. 1
Highly Compensated Employee Salary
Eligible for overtime pay as of Dec. 1: Employees with annual salaries between $100,000 and $134,004
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Automatic Updates
Every 3 years beginning
January 1, 2020
Notification will be provided 150 days before effective date.
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Duties Test Also Determines Exempt Status
1. Administrative employee
2. Executive employee
3. Outside sales employee
4. Learned professional
5. Creative professional
6. Computer professional
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Duties Test Also Determines Exempt Status
Administrative Employee
Performs office or non-manual work directly related to management or general business operations.
1. Administrative employee
2. Executive employee
3. Outside sales employee
4. Learned professional
5. Creative professional
6. Computer professional
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Duties Test Also Determines Exempt Status
Highly Compensated Employee (HCE)
Exempt if performs even one of the duties of an executive, administrative, or professional employee.
$ $ $
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Implementing the Change
Exempt employees must be paid a salary of at least
90% of the minimum salary level each workweek:
$821.70 or $42,728.40 annualized.
At quarter end, any shortfall to the $47,476 requirement must be made up in the first pay period of the next quarter.
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Notifying Employees of the Change
Certain state laws require
7 to 14 days advance notice for changes in pay.
Certain states mandate 30 days or more.
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Complying with the Change
Option A: Be reclassified as non-exempt and be paid overtime for hours worked over 40 hours per week (in most states).
Option B: Have their salaries increased to meet the new requirement, provided the duties test is satisfied.
Exempt employees not currently paid the new minimum salary requirements
MUST EITHER:
OR
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You Need to Avoid Litigation
Exempt Employees
Employer liability: • Back overtime pay
• Fines and damages
• 3-year look back period
=
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Failure to Comply Is Costly
Business Impact • Diversion of resources • Distraction of management and
employees • Disruption to business operations • Adverse publicity
Out-of-Pocket Expenses • Back overtime compensation PLUS an equal amount as “liquidated damages” • Post-judgment interest • Civil penalties up to $1,100 per person • Plaintiff’s attorney’s fees and costs • Employer’s defense fees and costs
Legal Ramifications • A two-year limitations period,
three years for willful violations • Future court-ordered compliance • Liability for management • Criminal penalties
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Failure to Comply Is Time Consuming
Conduct your own internal audit:
1. Compare overtime laws with your processes and ensure compliance.
2. Review job descriptions in question.
3. Interview managers to ensure employee job descriptions are accurate.
4. Determine employees’ job duties and review timekeeping records.
5. Assess current exempt employee roles to identify amount of time allocated on all tasks performed.
6. Confirm employees perform their jobs as assigned and work the hours designated by management.
7. Check overtime records to ensure pay consistency and uncover discrepancies.
Preparing for a DOL Audit
Consult with your experienced
Extensis HR Manager.
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The Extensis FLSA Analysis
1. Conduct payroll audit
2. Conduct FLSA testing review of affected positions
3. Review / create job descriptions
4. Reclassify employees per HRM recommendation
5. Identify time tracking system (e.g., paper or automated)
6. Implement scheduling (e.g., paper or automated)
7. Review / modify pay frequency
8. Revise / create policies a. All compensatory time b. Travel policy c. Scheduling policy d. Missed punch/punch correction policy e. Approval policy f. OT policy g. Remote work policy h. Mobile device policy (cell phone/laptop) i. On-call policy
9. Update and acknowledge handbook
10. Assist with initial and ongoing communication for managers and employees
11. Assist with training for systems, processes, and compliance provisions
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Fast Approaching Deadline
Remember…only
5 months left to be in compliance.
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We Can Help
Call your Extensis HRM at:
(888) 473-6398 (prompt 1)
Or email us at:
Thank You