Upcoming FLSA Exemption Changes

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The U.S Department of Labor has recently announced that the final rules regarding the changes to the FLSA White Collar Exemption Regulations will be published in July 2016. It has also indicated that the regulations will be effective 60 days after their publication. This means the changes will become effective no later than September 2016.

The DOL proposed regulations will significantly increase the salary basis test for most FLSA exemptions. The proposed change would make several million more employees eligible for overtime payments, which could have a significant impact on an employer’s bottom line. An increase in the salary basis test for most FLSA exemptions will mean employers will need to carefully evaluate their currently exempt employees to determine which, if any, will be impacted by the new regulations.

Aside from figuring out how to reclassify employees while protecting your bottom line, you’ll also want to consider a number of policies and procedures that apply to non-exempt employees, and whether they should be updated or added to your employee handbook or other operating manual.  Let’s take a look at a few of these key policies, keeping in mind the Golden Rule of wage and hour: non-exempt employees must be paid for all time they are “suffered or permitted” to work. This doesn’t just mean time in the office, but all time, whether approved by the employer or not.

 

Timekeeping: If you don’t have some kind of timekeeping policy in writing, now is definitely the time to create one.

Off-the-Clock Work: Make sure employees know that they generally should not be working off-the-clock, but if they are (hopefully with permission) that time should be recorded.

Bring Your Own Device (Use of Personal Devices): We recommend a policy that addresses use of employees’ personal devices such as phones, tablets, and laptops.

Meal Periods and Break Periods:
 Many states requires meal and/or break periods for non-exempt employees. Check your state requirements and make sure you’re offering and enforcing these rest periods. Sometimes these breaks can be waived by the employee if they choose to do so and if they sign a written waiver, but check your state laws before offering this option, as it may not be allowed. If an audit revealed that employees were skipping lunch and you had no evidence that it was their choice, you could find yourself in hot water with the Department of Labor.

Overtime: Now would be the time to ensure that you’re familiar with your state and local overtime laws. Although most employers will only be subject to the federal requirement to pay time and a half for hours worked over 40 in a week, Alaska, California, Colorado, Florida, and Nevada all have daily overtime, and Massachusetts and Rhode Island require some employers to pay a premium for work on Sundays. Whatever your state requires, make sure your managers are aware of the rules and that you’re prepared to comply.

 

There may be more policies specific to your business or industry that require attention in light of the upcoming changes, but these should provide a good starting point. How to communicate, or re-communicate, these policies is up to you.  For more information about updating policies, communicating changes, and generally dealing with the non-financial impacts of this change, contact our team at info@coastalpayroll.com to see how CoastalHR can help you manage the masses.