05/18/2016
The U.S. Department of Labor sent its proposed Fair Labor Standards Act overtime rules to the U.S. Office of Management and Budget for review mid March. OMB review is the final step before rules are published and implemented. Experts predict that final rules will be published sometime between late April and early July, with an effective date of December 1, 2016. Staffing firms/employers should prepare for the rules’ financial and other ramifications now.
The specifics of the final rules are unknown, but the rules will most likely increase the overtime exemptions’ current annual salary threshold from $23,660 to the proposed rules’ threshold of $47,476 per year, or $913 per week. This means that employees (certain recruiters, account managers, and other staffing firm personnel) who meet the duties tests under the professional, executive, or administrative exemptions but do not earn the new requisite salary may be nonexempt and entitled to overtime.
Staffing firms/employers should think about how they will handle the final rules and the effects. Such considerations may include:
- Identify all potentially affected employees and determine how many hours they currently work per week
- Determine whether to continue paying said affected employees on a salaried basis and raise their salary to comply with the new rules OR convert them to hourly employees and be subject to paying overtime
- Track newly nonexempt employees' work hours, including: before or after regular hours, on weekends, and from home
- Consider whether or not to adjust employee wages, commissions, bonuses, and benefits. Also, if for perceived equity or other reasons, to also adjust others' compensation and benefits
- Assess daily work performed by affected employees and if their duties can or should be modified; determine if limiting their work hours to less than 40 per week is feasible and, if so, assess how to make sure their work gets done, additional employees may be needed.
- If employees are reclassified as nonexempt, should a portion of overtime costs be passed along to clients?
- Consider how the decision to reclassify affected employees will be communicated to employees
**LINK TO FINAL RULE PUBLISHED BY THE DOL ON MAY 18, 2016:
https://www.dol.gov/whd/overtime/final2016/
We suggest that you contact your labor lawyers for specific interpretations and how to implement the new rules in conformity with the law.
Final Rule: Overtime - Wage and Hour Division (WHD) - U.S. Department of Labor US Department of Labor: The Wage and Hour mission is to promote and achieve compliance with labor standards to protect and enhance the welfare of the Nation's workforce.