On March 14, 2016, the Office of Management and Budget (OMB) received final changes for proposed revisions to the federal wage & hour law from the Department of Labor (DOL).
One former DOL wage & hour administrator believes the rule will move quickly and may be published as early as July 7. That date would make new regulations effective on Labor Day, September 5 (60 days from the date of publication in the Federal Register). An alternative view anticipates publication just before Labor Day with an effective date just prior to Election Day.
Regardless, it is as important as ever – and now is a good time – to review your compensation practices to plan for likely changes that may be required by these updates.
(More information in the October 22, 2015, post on this site.)
The Department of Labor (DOL) is busy reviewing over 290,000 public comments submitted on proposed key changes to the regulations defining exemptions from the Fair Labor Standards Act (FLSA). Good for business leaders who made their opinions known: whether in support or contention.
Experts agree that change will come, as this issue has the focused attention of the Administration. While there is some thought that the DOL may reduce the target salary threshold to something less than the 40th percentile of earnings for full-time salaried workers, change will be significant.
Now is a good time to consider how best to manage the impact of proposed changes, whether the salary threshold is set at $970 per week, the current 40th percentile; $852 per week, the current 35th percentile or $773 per week, the current 30th percentile.
There are financial and operational considerations:
- The first obvious question: What positions’ pay rates will fall below each of these thresholds?
- Will pay rates below a threshold be increased to maintain exempt status or will positions be reclassified as nonexempt, eligible for overtime pay?
- If reclassification is elected, are timekeeping and other systems adequate?
- How will pay rates for positions “close to” the thresholds be managed?
- How many hours do employees in likely reclassified nonexempt positions routinely work per week?
- If a routine work week is more than 40 hours, will base pay rates remain the same or will rates be reduced to account for likely overtime compensation?
- Will alternative salary practices be considered?
- How will anticipated changes impact operational issues such as staffing, scheduling and work assignments?
- What changes will be required to job duties or descriptions?
There are also important workplace culture considerations:
- What is your communication plan?
- When will you talk with employees?
- What information will you share?
- What tone will you set?
Answers to these and other questions will be important to your business. Consider them well. Consult your advisors. Be as prepared as you can be.