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Now is the time to act on FLSA regulations

August 11, 2016

By Lori Stewart, SPHR®, SHRM-SCP, HCS, Partner, Human Resources Consulting

The Fair Labor Standards Act (FLSA) protects more than 135 million workers in approximately seven million workplaces. In May 2016, the Department of Labor (DOL) officially released the new FLSA regulation updates that will take effect December 1, 2016. Among these updates was the change raising exempt employees’ minimum salary from $23,660 annually ($455 weekly) to $47,476 annually ($913 weekly). Before you consider addressing these changes strictly through salary increases, stop and consider where you are today. Are your employees appropriately classified according to the stringent FLSA definitions of exempt or non-exempt?

If classified as exempt, do they meet the current salary threshold? Are they paid on a salaried basis? Do they perform exempt or “white collar” job duties?

If classified as non-exempt, are you paying them for all hours worked? Are you following state and federal laws as to when overtime must be paid? Have you established and communicated a fixed work week that is representative of 168 hours meaning seven consecutive 24-hour periods?  Do you have an appropriate tracking methodology in place to substantiate the hours you have paid non-exempt employees?

Business owners will need to consider several factors when developing a plan for complying with these new regulations. In your plan, consider how the business is organized, how employees are classified (ensure your position descriptions are up-to-date), and also include a compensation analysis of those positions which may be questionable as to how they should be classified.

First, consider any organizational changes that can impact your business’s compliance with the overtime rule. Align your organizational structure in a way that makes sense and can serve as a long-term plan for the business. Consider the redistribution of work if necessary.

Next, take a good look at your current position descriptions for accuracy. This will be a crucial step in developing a plan for the future. Make sure the essential duties are assigned to the appropriate positions and consider how roles may be adjusted to meet compliance while still fitting your business’s needs. Understanding the administrative exemption can be complicated so it is imperative you’re starting from an accurate perspective of the job itself.

Once you have analyzed your positions you will need to consider an analysis of compensation. Will you classify as non-exempt and pay for each hour worked and administer overtime? Or will you raise appropriately classified exempt employees’ salary to meet the new threshold? Will you hire additional resources? Or will you combine some of these strategies?

Few businesses are immune to these new FLSA regulations and December 1 will be here before we know it. Even if you have read information that suggests the possibility these rules may be overturned, compliance with the FLSA is a legal requirement. Take the necessary steps now to achieve and maintain compliance; you will be acting in the best interest of your employees and your business.

For more information or assistance, call 888-556-0123, email hrconsulting@hkpayroll.com  or submit our online form.

This article was previously published in the August 2016 Business Times.

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