New Proposed FLSA Regulations: Implications for Employers [Part 2]

As promised, this article will cover ways companies can meet the requirements of the proposed new FLSA regulations. We also recommend reading the previous article, where we discussed the current law and the new changes.

Future Action

Now is a good time to review whether people at your organization who have been classified as exempt are really exempt. Too many employers make the mistake of improperly classifying employees as exempt solely because they pay them a salary. Salary is a method of wage payment, not a classification of overtime eligibility.

Many companies have classified employees as non-exempt but pay them a salary. Non-exempt employees don’t have to be exclusively hourly workers. An employee who is going to make the $47,476 salary level still may not be properly classified based on the nature of the duties required for exemption. If you have questions about a particular employee, be sure to study the official definitions carefully. These can be found from the U.S. Department of Labor here.

By the way, job titles don’t count. An exemption is based on the job description and the actual duties performed. If you have not updated your job descriptions lately, you may want to start by having an incumbent participate in the process.

Prior to December, these preparation steps need to occur at your company:

• Identify all current employees who are classified as exempt (not currently eligible for overtime) and are making under $47,476 per year.
• Determine how close these employees are to this threshold.
• Determine what potential overtime hours these employees worked in the past year.
• Calculate the cost of overtime based on time-and-a-half.
• Determine if it is more cost-effective to increase these employees to the $47,476 level or to pay the anticipated overtime.
• With employees for whom it would be economically unwise to raise to $47,476, determine how to record their time worked. Once these employees are declared non-exempt (eligible for overtime), you will have track their actual time worked with accuracy.
• Institute a system of checks and balances to ensure the updated tracking time has occurred.
• Monitor the annual index to ensure exempt employees remain exempt and to assess whether further adjustments need to be made.

Additional Considerations

Accurately tracking the time of newly re-classified employees will be very important for your organization. This tracking can be done “old school” using paper timesheets or by using new technology like mobile devices. The important consideration is finding a system that your employees will adapt to most easily.

Going Forward

Understanding and adhering to these new regulations will be critically important. A tremendous amount of press has already focused on this topic, and attention will continue to increase as December approaches. Plaintiffs’ attorneys will be ready to help employees who feel they are not being treated correctly.