I already pay all of
my employees a salary, so I do not need to worry about this new rule, correct?
That is not necessarily correct. Many employers were unaware that in order for
an individual to be exempt from overtime, there are 3 requirements that must be
met:
1. The employee must be paid a
salary;
2. The salary must meet the salary
level test, which is set in the final rule at $47,476. (Many employers ignored this test, because
the previous level was $23,660, and most salaried workers performing exempt
duties easily met this test); AND
3. The exempt worker must be
performing exempt duties.
The new rule changes the second test, the salary level, but
it has caused many employers to take a second look at the duties test as
well.
Why is the new salary
level so high, none of my employees are paid that much!
Congress originally passed the Fair Labor Standards Act in
1938, to guard against abuses in our industrialized society, with workers working
long hours at minimal pay. The law set
minimum wage and overtime rules. It
included exemptions for those workers who performed higher level duties, who
were paid at a level well above minimum wage.
The salary level was set to assure adequately compensation for those
truly performing exempt work. The
Department of Labor places this threshold at the 40th percentile of
earnings of full-time salaried workers in the South, the lowest wage
region. The 40th percentile
is thought to be a dividing line between nonexempt and exempt workers.
What about part time
employees who occasionally work more than 40 hours in a week, do I need to pay
them overtime?
There is no distinction between part and full time salary
level, so part time workers who make less than the salary level and who work
more than 40 hours in one week must be paid overtime.
Do I need to require
all of my employees begin keeping time records?
If after an analysis of the workforce, some employees who
have been considered exempt are making less than the salary level, you will be
required to keep track of their hours and pay time and a half for hours worked over
40, even if they are paid a salary. For
workers performing exempt duties, and paid more than the salary level, you do
not need to track their hours.
What should my employee
handbook say about overtime?
If you want to control overtime expenses, your handbook
should clearly prohibit unauthorized overtime, require supervisor approval,
require accurate recordkeeping, and provide for discipline for those who do not
follow the rules.
Will the rule apply
to my business?
This rule will apply to all business that operate in
interstate commerce and which are subject to the FLSA, which is virtually every
business.
We are a nonprofit,
and I had heard they would exempt nonprofits, are we exempt?
There is no exemption or exclusion for nonprofit businesses.
Do we have to comply
today?
The rule will go into effect December 1, 2016, absent an act
of Congress.
Won’t Congress pass
some law nullifying this rule?
That is unclear at this point, legislation has been
introduced, but it is uncertain whether it will pass and become law.
What do I need to do
right now?
If you have not already, it is time for every employer to
take a hard look at exempt workers.
There are several exemptions that could apply, and each one should be
analyzed as compared to the work that your employees perform, to assure that
they are exempt. For workers under the
threshold, you can do one of three things:
1. Make them nonexempt and start tracking hours and paying overtime. 2.
Raise their salary to the salary level. 3. Prohibit overtime work (see above
for handbooks).
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