Proposed changes to current overtime rules

There are proposed changes to the Fair Labor Standards Act (FLSA) which everyone needs to begin taking stock and watch your calendar.

The FLSA requires non-exempt employees to be paid one-half (1.5) times their regular hourly rate of pay for all hours worked over forty (40) during a single workweek. 

In order to be classified as an exempt employee, there are three parts of the test that need to be met.

1.    be salaried, meaning being paid a predetermined and fixed salary that is not subject to reduction because of variations in hours, quality or quantity of work,  (the "salary basis test");

2.    be paid a salary at least $455 per week (the equivalent of $23,660 annually (the "salary level test"); and

3.    primarily perform executive, administrative, or professional duties, as set by the Department of Labor, (the "duties test").

The  proposed overtime rule change on the salary basis test could  take the minimum salary from $455/week ($23,660 annual) to $970/week ($50,440).  Whaaaat???

This is a 113% increase in the salary threshold.  I’m not saying a change in the regulation isn’t warranted, heck the last time changes were made was back in 2004 when George W. Bush was in office, but that is a dramatic increase that will affect your organization.  The rule will likely take effect mid-2016.

Companies will soon need to start reviewing their exempt population to see how the change might affect them.  In my next blog I will highlight some of the factors to consider and steps you can take.