This article is the third in a three-part mini-series about the new Department of Labor (DOL) regulations under the Fair Labor Standards Act (FLSA) that were scheduled to take effect December 1. Part 1 is an overview and review of the DOL rules with regard to exempt v. non-exempt employees, Part 2 highlights four changes taking place and essential facts as of December 1, and Part 3 summarizes four options you have to ensure you comply with the new rules without negatively impacting your business.
On November 22, a federal court in Texas issued a nationwide preliminary injunction that will at least temporarily halt the implementation of the new rule; however, employers should be aware of and plan for the new rules in case they take effect soon.
Unless an employee is “exempt” under the DOL regulations, then – generally – he/she must be paid overtime at the rate of 1.5x their normal hourly rate for all time worked greater than 40 hours in a workweek. This is true even if the employee is paid a salary. Employers typically prefer their employees be exempt because paying for overtime can be very expensive. The new rules are designed to fully implement the FLSA overtime protections and to simplify the identification of overtime-exempt employees. Here are four options for how to comply with the new regulations.
- Make no changes. If you have white collar employees who do not work more than 40 hours per week, then the new rules will have no effect on their pay because even though they are overtime-protected, they do not work overtime.
- Raise salaries to or above the new level. If you have employees whose salaries are close to the new salary level, and who regularly work overtime, then you may choose to raise the salaries of such employees to maintain their exempt status and avoid the costs of overtime.
- Pay more overtime. You may decide that it makes business sense to continue to pay certain employees on a salary basis, and just pay overtime for hours they work beyond 40 in a week.
- Reorganize and adjust workloads and schedules. You may choose to adjust which duties are done, and by whom, to account for the new rule, and to minimize the likelihood that certain employees will work more than 40 hours in a given week. For example, you may choose to assign duties to employees who typically work less than 40 hours, or you may ask employees that typically work more than 40 hours to arrive one hour later each day.
Joe received his law degree from the University of North Carolina–Chapel Hill School of Law and his Accounting degree from the University of Rhode Island. He is admitted to practice law in Connecticut, Massachusetts, and Rhode Island, and he is a CPA. He is an Adjunct Professor and lecturer at the University level and has been a frequent speaker on business planning and legal matters.
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