Hearkening back to the Department of Labor's May 2016 proposal to increase the salary-level threshold for white-collar exemptions from $23,600 annually ($455 per week) to $47,476 ($913 per week), the DoL has issued a new proposal which would increase the white-collar exemption to $35,308 annually, or $679 per week. If approved, this new proposal would result in the reclassification of more than 1 million currently exempt workers and potentially increase the compensation for those already above the new threshold.
It is important that employers carefully review an employee's job duties and not rely only on job titles to ensure they qualify under one of the Fair Labor Standards Act exemptions. Simply meeting the salary threshold does not automatically qualify an employee as exempt from overtime regulations which stipulate that an employee be compensated for hours worked over 40 per week at a rate of one and a half times their standard rate of pay.
Who is affected?
Those employees who are currently classified as exempt under the white-collar exemption and meet one of the FLSA exemptions, but who are compensated less than the $679 per week threshold would require reclassification. However, the 2019 proposal maintains overtime protections for police officers, fire fighters, paramedics, nurses, and laborers including: non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers. Additionally, the DoL provided clarifying statements that the proposal does not call for automatic adjustments to the salary threshold in future years.
How are you affected?
Similar to the discussion of 2016, it is important for organizations to begin planning action now. A final ruling by the U.S. Court of Appeals of the Fifth Circuit has yet to be rendered on the 2016 proposal, pending further rule making regarding a revised salary threshold. The 2019 DoL proposal could face similar legal hurdles; however, it's vital that businesses begin preparing to review their workforce and plan to make necessary changes.
An organization's reaction will vary based on the number of hours worked by their currently exempt employees. "Companies whose exempt employees commonly work in excess of the standard 40-hour work week will face rising payroll costs should these employees become eligible for overtime. However, the costs of non-compliance with the new ruling are significant and compounding, and would almost certainly be greater than the costs associated with adjusting exempt employees' compensation," said Monty Stanley, PHR.
How can we help?
In time and attendance, accuracy is everything. Inaccurate payroll can result in lost trust with employees, problems with human resources, and even wage and labor penalties. TimeClock Plus provides you the tools and technology needed to pay your people accurately and on time while maintaining FLSA compliance. Our flexible licensing model allows you to adjust to your changing circumstances and to quickly react to changing legislation. For more than 30 years, we have served one purpose - to protect people; our customers, our team, and all of those impacted by our business. If you believe your organization may be impacted by the 2019 DoL proposal, contact one of our Solutions Consultants and see how we can help you.