America Got A Raise

Just a friendly reminder that the federal Fair Labor Standards Act (FLSA) final rule regarding overtime regulations will go into effect on December 1, 2016. This rule is anticipated to effect over 430,000 employees in California and Nevada combined, and is expected to impact over 4.2 million employees across the United States in the first year of implementation. According to the FLSA’s website, the final rule will:

• Raise the salary threshold indicating eligibility from $455 per week to $913 per week (which amounts to $47,476 per year).

• Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.

• Strengthen overtime protections for salaried workers already entitled to overtime.

• Provide greater clarity for workers and employers.

The U.S. Department of Labor’s Blog website outlines several options for employers to respond to this new rule, they are outlined below as typed on the site:

• Raise salary and keep the employee exempt from overtime: Employers may choose to raise the salaries of employees to at or above the salary level to maintain their exempt status, if those employees meet the duties test (that is, the duties are truly those of an executive, administrative or professional employee). This option works for employees who have salaries close to the new salary level and regularly work overtime.

• Pay overtime in addition to the employee’s current salary when necessary: Employers also can continue to pay their newly overtime-eligible employees the same salary, and pay them overtime whenever they work more than 40 hours in a week. This approach works for employees who work 40 hours or fewer in a typical workweek, but have occasional spikes that require overtime for which employers can plan and budget the extra pay during those periods. Remember that there is no requirement to convert employees from salaried to hourly in order to calculate their overtime pay!

• Evaluate and realign hours and staff workload: Employers can ensure that workload distribution, time and staffing levels are all managed appropriately for their white-collar workers who earn below the salary threshold. For example, employers may hire additional workers.

The federal and state governments have different application of exemptions to employees performing specific job duties. Employees inquiring about the new rule’s application to a current salary or overtime eligibility should contact a Human Resources representative. To learn more about the new rule, visit blog.dol.gov.