September 6, 2016
It’s September 6, the day after Labor Day, symbolically the end of summer, traditionally the first day of school, and psychologically the beginning of the homestretch of the year.
It’s also 85 days until December 1, which is the effective date of the new federal rule on who qualifies for the white-collar overtime exemptions. If you – as a small employer, or as the person responsible for HR in a company of any size – haven’t become familiar with the new rule and analyzed your workforce to plan your compliance strategy, it is time to stop procrastinating. December 1 will be here before you know it, and your misclassified employees may expose you/your company to claims for unpaid wages, liquidated damages, attorney fees, and penalties.
What is the new rule? The new rule establishes an increased minimum salary for most employees who are exempt from the Fair Labor Standards Act’s requirement of overtime pay – at one and one-half times the employee’s usual hourly rate – for hours worked above forty hours in a workweek. More specifically, workers who meet the duties tests to be classified as executive, administrative, or professional employees must now be paid, on a salary basis, at least $913 per week, or $47,476 per year. Since 2004, the threshold salary has been $455 per week ($475 per week in Connecticut), so this is a big change.
Aren’t all my salaried employees exempt from overtime? No. That is a popular misconception, but the white-collar exemptions only apply to employees who meet the applicable duties tests (summarized here: [https://www.dol.gov/whd/overtime/fs17a_overview.pdf]) and who – as of December 1 – are paid at least $913 per week on a salary basis. You can use the advent of the new rule as an opportunity to determine whether your currently exempt employees are actually performing exempt duties. Keep in mind that it is what they actually do that matters, not their titles or what is in their job descriptions.
I have employees who have been properly classified as exempt, but who don’t make $913 per week. What are my options?
How can I keep track of hours for employees who don’t punch a clock? It is the employer’s legal obligation to keep complete and accurate time records for overtime-eligible employees. You can use any method you choose to accomplish this. Time sheets, software, punch-clocks, and electronic devices are among your options.
Where can I find additional information? We have blogged on this topic before on our Labor and Employment Blog, Working Together, [http://workingtogether.pullcomblog.com/archives/government-releases-new-overtime-exemption-rule/]. There is a great deal of useful information on the US DOL Website [https://www.dol.gov/WHD/overtime/final2016/]. And, of course, you can contact experienced labor and employment counsel.
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