DOL Announces new Fair Labor Standards Act (FLSA) Overtime Rules

Today the Department of Labor (DOL) has announced a proposed rule that would extend overtime protections to nearly 5 million white collar workers within the first year of its implementation. Failure to update the overtime regulations has left an exception to overtime eligibility originally meant for highly-compensated executive, administrative, and professional employees now applying to workers earning as little as $23,660 a year. Under the proposed rule and starting in 2016, the white collar salary requirement will be more than doubled to $50,400 annually or $970 per week to be considered exempt from overtime or minimum wage.

Similarly to these white collar exemptions, the “highly-compensated” exemption under the FLSA will be increased from $100,000 to $125,148 annually.  Unlike the 2004 regulations, these amounts are not stagnant but will be automatically updated each year to the respective, applicable 40 percent or 90 percent thresholds.  This means each year employers may need to modify their payrolls to ensure their employees are properly classified as exempt.

This proposed rule was reviewed by the OMB (Office of Management and Budget) but has not yet been published in the Federal Register.

The immediate result for employers is that they will be required to review the exempt status of their employees to avoid fines and penalties. In addition, questions employers should consider are:

• Do you have an employee handbook that details your overtime policies?
• Do you have job descriptions for all employees?
• Do you provide offer letters to new employees? If so, do they indicate that the job is an exempt position?

Paypro can help you with an HR Wellness Checkup to establish if your organization is exposed to any unnecessary FLSA related liabilities. Please contact us for more information.