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

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PRESENTED BY Kerry Lear, JD, PHR

FLSA OVERTIME CHANGES: WHAT EVERY BUSINESS NEEDS TO KNOW

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

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(adj.) Not subject to certain federal workplace laws

• r protections,

especially those requiring overtime compensation: exempt employees. (adj.) Subject to certain federal workplace laws

• r protections,

especially those requiring overtime compensation: policies 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

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∙ 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?

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• 1. Raise salary to maintain exemption
• 2. Re-classify as hourly non-exempt
• 3. Re-classify as salaried non-exempt

(weekly salary/40) + (1.5 x weekly overtime hours) = new hourly rate weekly salary/40 = 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

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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

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Write or Revise Policies

Making Sure You Are Classifying Employees Correctly

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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!

White Collar Employees Fishermen Farm Workers Casual Babysitters Wreath Makers Some Sales Employees Misc.

Various Exemption Categories

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White Collar Exemption

• Non-manual or office work
• Exact hours less important
• Independent judgement and

discretion required

White Collar Exemptions

Duties Salary Level Salary Basis

White Collar Exemptions Executive Administrative Professional

(Learned & Creative)

Highly Compensated Computer Outside Sales

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Take Aways

Questions & Answers

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 as a family law attorney.

Thank you!

Kerry Lear