The new FLSA (Federal Labor Standards Act) effective December 1, 2016 addresses the need to pay overtime to salaried employees.
What will change?
- The initial increase to the standard salary level from $455 to $913 per week and HCE total annual compensation requirement from 100,000 to 134,004 per year.
- Employers will be able to use nondiscretionary bonuses and incentive payments for up to 10 percent of the standard salary level.
- Establishes a procedure for automatically updating the salary and compensation levels every three years
What did not change?
- Any of the existing job duty requirements to qualify for exemption
- Both the standard duties test and the HCE duties test
IF YOU THINK FLSA DOES NOT APPLY TO YOU, YOU MAY BE WRONG!
Employees of enterprises that have an annual gross volume of sales made or business done of $500,000 or more are covered by the FLSA. In addition, employees of certain entities are covered by the FLSA regardless of the amount of gross volume of sales or business done. These entities include: hospitals; businesses providing medical or nursing care for residents; schools (whether operated for profit or not for profit); and public agencies.
What do you need to do to ensure you are following the guidelines?
- Track and pay your salaried employees OT
- Make sure you leave an audit trail of paid OT, and have data to support each employee’s time. The amount of hours they currently work will directly impact how you chose to handle their compensation
- Based on that data, raise your salaries to $47, 476, you will automatically add costs, but it may end up saving you a lot of time and money in the long run
- Reclassify affected employees and prohibit overtime without authorization