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Update: Proposed Changes to FLSA Overtime Rule Dismissed

How the New FLSA Overtime Rule May Affect You

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The Department of Labor’s (DOL) new rule for the FLSA overtime exemptions is effective December 1, 2016, so what does that mean for employers and how can you prepare now for the changes ahead?

What is the New FLSA Overtime Rule?

The final overtime rule changes the existing regulations that determine which “white collar” workers are entitled to minimum wage and overtime pay protections under the Fair Labor Standards Act. The new amounts are as follows:

  • New salary threshold: $913 per week ($47,476 per year)
  • Highly compensated employee salary threshold: $134,004 per year

Under the new rule, the salary threshold will increase every three years based on the 40th percentile of all full-time, salaried employees in the lowest income censused region of the country, which is currently the South. Discretionary bonuses do not count toward the salary threshold.

The “white collar” exemptions cover employees who are employed in a bona fide administrative or executive capacity, as well as most professionals. The minimum salary requirements do not apply to the following types of professionals:

  • Outside sales
  • Doctors
  • Lawyers
  • Teachers
  • Computer employees - they have their own special minimum pay requirements.

The DOL has duties tests in place to help employers determine if their employees are subject to the FLSA overtime rule based on the job capacities listed above. Job titles do not determine exempt status.

How Does This Affect Employers?

Employers have until December 2016 to either reclassify currently exempt employees as non-exempt or increase the salaries of currently exempt employees to keep the exemption.

Example

Managers who were properly classified as exempt, but were making $45,000 per year will either need to be given a raise to $47,476 per year or reclassified as non-exempt and paid both minimum wage and overtime for all hours worked over 40 in a week.

With the new FLSA overtime rule, employers will need to review their current business policies and employee classifications to determine the potential impact on their organizations. Areas of your business that could be impacted include:

  • Time and labor management
  • Employee classification
  • Payroll
  • Employee scheduling
  • Compliance reporting
  • Existing business policies, such as time & attendance

How APS Can Help

APS’s Time & Attendance solution simplifies time and labor management to ensure your company is accurately tracking employee hours and maintaining compliance. APS’s unified system can help you:

  • Manage employees’ schedules and accurately track time for controlled labor costs
  • Automatically track employees based on their classification
  • Ensure accurate payroll processing
  • Easily run reports for salary exempt versus salary non-exempt employees per pay period
  • Store important company and employee documents securely in our cloud-based solution

Resources

Department of Labor Overtime Rule Duties Tests

FLSA Fact Sheet [Infographic]

FLSA Exemption Guide

Note: This article is not intended to communicate legal advice. A qualified attorney should be consulted for legal opinions.

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