First, a little bit of background: The Fair Labor Standards Act sets the minimum wage, overtime, recordkeeping and youth employment standards for American workers. These standards are enforced by the Department of Labor Wage & Hour Division. While most cases against employers are triggered by employees, there are new initiatives by the DOL to audit companies at random, with no trigger. This is why abiding by the new exemption law is so important. If you lose the “audit lottery” you’ll want to have all of your paperwork and timekeeping in order to avoid any issues during the audit.
On December 1st, the new Overtime Rules will go into effect. This changes how employees are compensated for overtime. Salaried employees that you currently do not pay overtime may now qualify for time and a half once they work over 40 hours per week.
Starting December 1st, to be classified as an exempt employee, the employee must:
- Be paid on a salary basis
- Have executive, administrative, or professional job duties:
- Executive: Primary duty of Managing the Enterprise
- Administrative: Primary duty includes exercise of discretion and independent judgement with regard to significant matters
- Professional: Primary duty must be to perform work that requires advanced knowledge.
- Be paid more than the minimum salary level set by the government, which is $47,476 (or $913 per week). Note that 10% of the salary can include a non-discretionary bonus.
Remember, there is an emotional side to this change for your employees and most likely a cultural shift within your company. Consider the best way to implement these regulations in your business and the most effective ways to communicate the changes to staff. Click here to read Burke Law's 5 steps to compliance.
CFBC Members: To read shared experiences from fellow members on how they handle overtime, salary, payroll, etc. please check out our LinkedIn group. Thanks to Burt Klein for suggesting a way to continue the discussion after the workshop.
For more information, please contact:
Rachel Yarch, Burke, Warren, MacKay & Serritella, P.C.
Karen Snodgrass of Cray, Kaiser Ltd.