/
DOL’s Final FLSA Overtime Regulations DOL’s Final FLSA Overtime Regulations

DOL’s Final FLSA Overtime Regulations - PowerPoint Presentation

test
test . @test
Follow
435 views
Uploaded On 2017-05-19

DOL’s Final FLSA Overtime Regulations - PPT Presentation

June 25 2016 Fortney amp Scott LLC 1750 K St NW Ste 325 Washington DC 20006 wwwfortneyscottcom Tele 2026891200 Burton J Fishman Esq bfishmanfortneyscottcom Important Legal Notice ID: 549853

salary employees exempt overtime employees salary overtime exempt threshold work hours employee option time week costs regulations current benefits

Share:

Link:

Embed:

Download Presentation from below link

Download Presentation The PPT/PDF document "DOL’s Final FLSA Overtime Regulations" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.


Presentation Transcript

Slide1

DOL’s Final FLSA Overtime Regulations

June 25, 2016

Fortney & Scott, LLC

1750 K St., NW, Ste. 325, Washington, DC 20006www.fortneyscott.com Tele: 202-689-1200

Burton J. Fishman, Esq.

bfishman@fortneyscott.com

Slide2

Important Legal NoticeThese materials are not intended to provide legal advice. Employers should consult either an experienced employment law attorney for legal advice about whether, based on their specific facts and circumstances, their company complies with the applicable federal and state laws.Slide3

AgendaIntroductionBackgroundNew Overtime RegulationsNext Steps for EmployersTakeawaysQuestionsSlide4

Introduction: Who Receives OvertimeUnder the Fair Labor Standards Act (FLSA) all employees are presumed to be eligible for overtime compensation for hours worked in excess of 40 in a workweek, unless they satisfy one of the exemptionsThe proper classification of employees is criticalMisclassification can result in significant liabilitiesIf an employee is misclassified as exempt, the employer can be liable for up to three years of back pay for all overtime worked, plus an equal additional amount as liquidated damageSlide5

Background: The Current Overtime Exemption RegulationsUnder the FLSA, “white collar” employees (executive, administrative, professional, and computer employees) are exempt from the Act’s overtime requirements if:Paid on a salary (or fee) basisSalary is at least $455/week, andEmployee’s primary duty is performance of exempt dutiesHighly-Compensated EmployeesSpecial exemption for highly-compensated employees who: Earn at least $100,000/yearPerform at least one of the exempt duties of an executive, administrative, or professional employee; andPaid on a salary basis at least $455/weekSlide6

New Regulations – Salary RequirementsMAJOR CHANGE: Salary threshold raised from $23,660 ($455/week) to $47,476/year ($913/week) for executive, administrative, professional, and computer exemptionsBonuses – 10% of standard salary threshold can be met by nondiscretionary bonuses, incentive pay, or commissions if payments made on quarterly basisHighly-Compensated Employees: annual salary level raised from $100,000 to $134,004Slide7

New Regulations – COLAStandard salary threshold and highly-compensated employee (HCE) threshold automatically updated every three yearsBeginning 1/1/2020, standard salary threshold will be raised to 40th percentile of full-time salaried workers in lowest-wage Census regionBeginning 1/1/2020, HCE salary threshold will be raised to 40th percentile of full-time salaried workers nationwideIn 2020, salary thresholds estimated by DOL to be: Standard: $51,168 – may be far too LOWHighly compensated: $147,524DOL will notify employers of any HCE salary increase no later than 4/4/19Slide8

Proposed Changes that Did Not Make the Cut in New OT RegsNO CHANGES TO PRIMARY DUTY TEST!Rumors that DOL would adopt >50% California test as primary duty test proved untrueCurrent test remains in effect – for now“Principle, primary or major duty”Ensure that all “white collar” exempt employees meet the primary duty test for one of the “white collar” exemptionsSlide9

NonprofitsNo exemption for nonprofits – Status quoEnterprise Coverage: >= $500,000 in gross revenue from ordinary commercial activityIndividual CoverageEngaged in interstate commerceDe minimis “exception” DOL will focus enforcement efforts on circumstances of “significant impact on compliance” Additional separate guidance issued by DOL Slide10

BEST PRACTICES FOR COMPLYING WITH THE NEW OVERTIME REGULATIONSSlide11

Multidisciplinary Compliance TeamCreate multidisciplinary compliance team to evaluate and implement necessary changes required to comply with new regulations:LegalHuman ResourcesFinance/ AccountingCompensation, Payroll, Benefits, ITTalent Recruitment and RetentionOperationsTrainingDevelop project planDetailed steps to assess risk and decide best optionsSlide12

Self-Assessment: Current Duties, Hours and WorkReview the current primary duty of each exempt employee – ensure compliance with the lawIdentify employees who no longer will be exempt by virtue of new salary Begin tracking hours of affected employees -- determine how many hours of work are now required to operate the business Calculate overtime costs for affected employees under the new regulationsCompare additional salary to maintain exemption vs. cost of overtime upon reclassification to nonexemptSlide13

Self Assessment: Current BenefitsAssess Benefits and PerquisitesDo benefits and perquisites change depending on whether employee is classified as exempt or nonexempt? Do costs rise with salary?If employee is reclassified from exempt to nonexempt, will there be changes in benefits? Consider loss of benefits for nonexemptsMay require major overhaul of benefits plans Can / should benefits be red-circled?Slide14

Compliance OptionsFocus on currently exempt employees receiving annual salaries between $23,660 and $47,476 If you don’t raise salaries by December 1, these employees will become nonexempt because they will not meet the new salary threshold requirementThree options:Increase salaries to meet new exempt salary threshold;Reclassify employees from exempt to nonexempt; and/orRestructure workforce/workPart-time and/or temporary employeesOutsourcing – Independent ContractorsSlide15

Option #1 -Increase salaries to meet salary thresholdConsiderationsWho to keep as exempt?Those closest to new salary threshold?Those working most overtime?Other considerations?CostsEver–Rising Salary and BenefitsImpact on workplace cultureResentment of those who are just below exempt salary thresholdEnsure that new salary threshold is met Slide16

Option #1 – Cost ConsiderationsIf “bumping up” salary, remember -- salary threshold will be revised every three years; maybe a lotRaising some salaries (e.g., currently exempt employees who are below the new salary minimum) may create salary compression and/or pressure for salary increases for additional positionsIf additional work reassigned to still-exempt employees, should they get a raise?Slide17

Option #1 - Bonuses, Commissions and Incentive PaymentsBonuses to meet salary thresholdConsider whether to use nondiscretionary bonuses, commissions and incentive payments to satisfy up to 10% of the required salary thresholdBUT ONLY if payments are paid at least quarterlyN/A for highly-compensated exemption“Catch-up” payment to satisfy threshold1st pay period after end of quarterRequires care in properly administeringIf the requisite bonus is not paid, all overtime hours for the past quarter are compensableSlide18

Option # 2 - Reclassify to NonexemptCurrent exempt employees can be reclassified as nonexempt at current compensationMUST implement timekeeping systemCan be simple or more sophisticated – just accurate and reliableMay need to restrict overtime to “authorized-only”A manager herself may be sent home at 40 hours to maintain her exemption!Wage costs can be maintained at previous level Calculate regular rate, taking into account overtime premium paid for hours worked over 40Consider whether fluctuating workweek or other method to pay overtime is applicableSlide19

Option # 2 - Reclassify to Nonexempt (cont’d)Do you wish to preserve current compensation?If so, you must determine “regular rate” including an estimate of overtime hours to be worked.When you are calculating the “regular rate,” be sure to include all hours worked, especially hours worked at overtime rate, in the calculation. For example:Employee earning $40,000/year ($770/week), working 45 hours a week: Divide 770 by 47.5 (not 40 or 45, but 40 + 5 + (5 divided by 2) to capture the time and half) to derive “regular rate”: $16.21/hour16.21 x 40 = 648.4224.31 (time and a half) x 5 = 121.58Total: $769.99Slide20

Option # 2 - Consequences of Reclassification Remember: “regular rate” can be affected by bonuses, commissions, and other extra pay in any work week, which will affect overtime rate, which must be computed each work weekSuggestion: If your estimate of hours worked is wrong (low), make up any difference with a quarterly or mid-year bonusSuggestion: let everyone know that year 1 is a trial run with adjustments to be made all yearConsider whether a Fluctuating Work Week plan works for some employeesSlide21

Option # 2 - Consequences of Reclassification (cont’d) Fiscal CostsCost of overtimeManagerial Costs – authorizing/monitoring overtime; overseeing workflow; productivityNew or enhanced time-keeping systemBIGGEST COST: Impact on productivity and efficiencySlide22

Issues to ConsiderCan you get same work done when you monitor hours worked and overtime costs?Will you re-assign work to still-exempt employees? If so, should they get a raise?How will new alignment of workers affect work flow?How will employees respond to the loss of flexibility? How will you??Will employees just above threshold resent not receiving overtime?Will managers resent salary compression?Slide23

Option # 2 - Consequences to Reclassification (cont’d)Morale and other intangiblesStatusMuch Reduced FlexibilityClocking in and outTime offCap on Telecommuting/Virtual workResentment – going both waysRecruitment and RetentionSlide24

Option # 2 - Consequences to Reclassification (cont’d)Morale is CrucialMany people are “invested” in their jobs and their roles. Re-classification to an hourly “status” – with a loss of scheduling flexibility -- may trouble a number of employeesBe certain to assure employees that a government regulation doesn’t change their status in the company, in your opinion, or anywhere elseSlide25

Option # 2 - Consequences to Reclassification (cont’d)IMPACT ON WORKFLOWManagers need to rethink how they direct and manage their employeesNo work assignments to be performed after hours or on weekends/holidays/vacations unless compensatedDon’t email employees after hours! Limit on TravelCan you keep productivity you need under these rules???Slide26

Option #3 – Restructure Workforce Hire part-time and/or temporary employees (but remember rising minimum wage where you work)Outsource to independent contractorsCosts:Increased recruitment costsIncreased managerial time -- cost to onboard, offboard, manage. Slide27

CommunicationCommunication is keyEstablish a communication team and develop a communication planKnow who will say what to whom and whenPer the communication plan, notify employees of impending changes required by new regulationsHold meetings; handouts with examplesIdentify and train supervisors to respond to individual employee inquiriesNote universal impact of new rules – every business is affectedSlide28

TrainingTraining, training and more trainingManagers and supervisors – Manage work flowMonitor and authorize overtimeManage employee morale Answer employee questionsEmployees – track time (both regular and overtime)HR – communicate changes and assist in training Slide29

Full Compliance by December 1, 2016 Effective date of regulations -- December 1 (5 months!)NB: December 1 falls on a ThursdayMany payroll periods end on Fridays, and the Friday before the deadline is the Friday after ThanksgivingKnow your payroll schedule to ensure you don’t miss the deadline for complianceGet started now! This is a sea change. Employers need to rethink how, when, and where work is done, so that they are able to make sound decisions and increase salaries and/or reclassify, as necessary, to fully comply by December 1Slide30

Don’t’ ignore state law overtime lawsSome states adapt federal FLSA Other states have different overtime rules, including longer statutes of limitationFLSA statute of limitation = 2 years; 3 years if willfulSome state statutes of limitation are longer:Calif.: 4 years + daily overtime, 50.1% duty ruleIlinois, Oklahoma: 5 yearsNew York, Maine: 6 yearsSlide31

TakeawaysConduct self-assessment; if legal counsel is available, do it under attorney-client privilege, otherwise it is discoverable in law suit or audit Devote appropriate resources, time and energy to assessing current environment and implications of increased salary thresholdDesign and implement detailed communication plan Train all stakeholders – managers, HR, and employeesRemember employee morale, corporate culture and other intangibles! Don’t ignore state lawSlide32

Questions?Thank you!Slide33

Burton J. Fishman has devoted his practice to developing the "law of the workplace," an interdisciplinary approach that offers employers counsel and representation on a broad range of matters growing out of government regulation of business.  Mr. Fishman is a Fellow in the College of Labor and Employment Lawyers, and was named as a Washington, DC SuperLawyer in 2007 and from 2010 through 2014 in the employment and labor practice by Washington Law & Politics magazine.  Mr. Fishman served as the Deputy Solicitor for National Operations for the U.S. Department of Labor during the George H. W. Bush Administration.  Mr. Fishman was co-chair (management) of the Federal Legislative Developments Committee of the American Bar Association's Labor/Employment Law Section and served as a member of its Equal Employment Opportunity Committee.  He also is a widely recognized author of over 100 books and articles on workplace issues. Burton J. Fishman

32Slide34

Fortney & Scott, LLCWorkplace solutions. Legal excellence.www.fortneyscott.com