2016 FLSA OVERTIME CHANGES: WHAT EVERY BUSINESS NEEDS TO KNOW - PDF document

2016 FLSA OVERTIME CHANGES: WHAT EVERY BUSINESS NEEDS TO KNOW PRESENTED BY Kerry Lear, JD, PHR Today’s Topics The Fair Labor Standards Act “put a ceiling over hours and a floor under wages…” - Frances Perkins, Secretary of Labor under FDR 1

2016 (adj.) Not subject to certain (adj.) Subject to certain federal workplace laws federal workplace laws or protections, or protections, especially those especially those requiring overtime requiring overtime compensation: exempt compensation: policies employees. for non-exempt employees who are paid by the hour. Commissions, Non-Discretionary Bonuses, and Incentive Pay • Up to 10% of minimum salary (base pay must be $42,728.40+) • Must be paid out at least quarterly – quarterly income must be at least $11,869 • If not enough is earned to keep the exemption: ∙ Make catch-up payment within one pay period ∙ Reclassify the employee as non-exempt and pay overtime retroactively 2

2016 ∙ Higher minimum salary level ∙ Some exemptions excluded ∙ Specific exemption rules California: In 2019 (for 26+ employees) state minimum salary for exempt employees will be higher than federal What Now? 3

2016 1. Raise salary to maintain exemption 2. Re-classify as hourly non-exempt 3. Re-classify as salaried non-exempt weekly salary/40 = new hourly rate (weekly salary/40) + (1.5 x weekly overtime hours) = new hourly rate Example:  Manager, salary of $41,600 per year, works 50 hours per week  Subordinates, paid $15 per hour  Manager’s new rate after cost -neutral math: $14.55 per hour 4

2016 A Note About Salaried Non-Exempt Status • Meaning: Employees will be paid the same amount every week during which they perform 40 hours of work or fewer • Not a silver bullet • Still need to track hours and pay overtime • Can make sense administratively when: ∙ Small number of non-exempt employees; ∙ Little overtime is worked; ∙ High level of trust in employees Implementing the Changes 5

2016 Write or Revise Policies Making Sure You Are Classifying Employees Correctly 6

2016 Who is covered by the FLSA? • Enterprise coverage: Any business that does $500,000 in business or sales annually, and those in certain industries, regardless of sales • Individual coverage: Any employee engaged in interstate commerce, which has a very broad definition Note: there is no exception for small employers! Various Exemption Categories Misc. Some Sales Employees Wreath Makers Casual Babysitters Farm Workers Fishermen White Collar Employees 7

2016 • Non-manual or office work White Collar Exemption • Exact hours less important • Independent judgement and discretion required White Collar Exemptions Duties Salary Level Salary Basis Executive Outside Sales Administrative White Collar Exemptions Professional Computer (Learned & Creative) Highly Compensated 8

2016 9

2016 10

2016 Take Aways Questions & Answers Thank you! JD, PHR | HR Pro Kerry specializes in employment law issues and development of HR tools and materials. Kerry holds a B.A. from Columbia University and a JD from Lewis & Clark Law School. Prior to entering the field of HR, Kerry practiced Kerry Lear as a family law attorney. 11