Struggling with the New Overtime Rule?  Here is One Compensation Option for Newly Non-Exempt Employees

time clockIn response to the final overtime rule, which increases the minimum salary level to qualify for the white collar exemptions under the Fair Labor Standards Act (“FLSA”), employers must begin to evaluate and alter their current employee classifications and pay structures in preparation for the rule’s December 1st effective date.    For many employers, it may not be possible to raise every exempt employee’s salary level to the new minimum of $47,476.00, over double the current threshold level of $23,660.00.  If employers cannot raise salary levels, exempt employees will have to be reclassified as non-exempt employees entitled to overtime pay.  This can be a very challenging situation for employers because many exempt employees are expected, and regularly do, work a certain amount of overtime each week to complete the required responsibilities of their positions.  Furthermore, exempt employees are used to being paid on a salary basis with some level of certainty in their take home pay.

To address these issues and create some predictability for both the employer and the employee, one option is to implement a compensation structure that pays certain non-exempt employees an annual salary factoring in a certain amount of overtime.  The FLSA permits non-exempt employees to be paid on a salary basis as long as Continue reading

The Final Overtime Rule Explained:  What Every Employer Must Do Next

Increasing Money GraphThe day that has been looming over employers for the past 2 years since President Obama directed the U.S. Department of Labor (“DOL”) to update and modernize the existing Fair Labor Standards Act’s (“FLSA”) white collar exemptions has finally arrived.  Today, the DOL released its final rule revising the regulations governing who is exempt from overtime, along with guidance on its major provisions.  The final rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, largely reflects what the DOL had proposed in 2015, with some important revisions, including a slightly lower salary threshold level at $47,476.00.  However, that salary floor still sits at more than double the current salary threshold of $23,660.00.

There is no doubt that the final rule will dramatically increase the number of workers who will now qualify for overtime pay, forcing every employer in the country to carefully assess how to handle the additional financial burden.  Indeed, the DOL projects that the rule will extend overtime eligibility to 4.2 million workers.

Significantly, the rule takes effect on Continue reading