Future of the Overtime Rule

Remember that overtime regulation that was supposed to take effect on December 1, 2016?  It would have doubled the Fair Labor Standards Act’s (FLSA’s) salary threshold for exemption from overtime pay from $23,660 to $47,476. Then in November, 2016 there was a federal court decision that halted the rule.  Now what can we expect?

That probably depends on whether the current nominee for Secretary of Labor is confirmed.  Alexander Acosta was questioned during a March 22 confirmation hearing before the Senate Health, Education, Labor and Pensions Committee.  At that time he said that he believed the salary threshold figure should be somewhere around $33,000 after adjusting for the cost of living since the last time the threshold was adjusted back in 2004.  He has not said what he thinks of the pending litigation, but he did suggest that if confirmed the Department of Labor will review the rule and possibly make changes.  Acosta even said that he is not sure whether the dollar threshold would supersede a duties test, and therefore not be in accordance with the law.  He said he would consult with officials at the Department of Justice to make a determination.

The Senate Committee is expected to approve Acosta’s nomination this week.  If approved it will then go to a full senate vote.  If confirmed Acosta said he would put all Department of Labor regulations through a review.  Stay tuned for more changes in 2017.

HR To Do List for November

If you are in Human Resources or upper management you have a busy month ahead of you.  You are probably in the middle of Open Enrollment, you are rgetting ready for your ACA reporting in January, and now you have to get the word out to affected employees that some of them are going to be paid hourly effective December 1, 2016.  Here is a little checklist to help you with that last one.

  • Review all exempt salaried employees who earn less than $47,476 per year or $913 per week.  Determine their new hourly rate.
  • Make sure that they are set up to record time the same way the rest of your hourly employees record time.  Set them up in the timeclock and get their badges ready.
  • Be sure that the managers of the affected employees sit down with them to discuss what will be changing.
  • Don’t assume that they know the rules they will need to follow.  Spell them out in a written communication as well and have them sign an acknowledgement.

Suzanne Lucas has provided an excellent letter example for Inc. Magazine.  Take a look at her example and it will help you with a tough communication.

http://www.inc.com/suzanne-lucas/how-to-tell-your-salaried-employees-they-are-now-hourly.html

Is that Manager Exempt?

There has been a lot of discussion lately about the upcoming changes to the requirements for employees to be considered exempt from the overtime provisions of the Federal Labor Standards Act (FLSA).  While most people know that the salary level test is changing from $23,600 per year ($455 per week) to $47,476 ($913 per week) many may not understand the other requirements.  The FLSA looks at job duties as well, rather than just job titles.  We are going to focus on one of the “Duties” tests.

Perhaps one of the most abused tests is the one for Exempt Managers.  Merely assigning the job title is not enough to qualify as exempt.  The basic job duties are pretty straightforward:

Job duties are exempt Executive/Managerial if:

  1. The employee regularly supervises two or more other employees,
  2. The employee has management as the primary duty of the position.
  3. The employee has some genuine input into the job status of other employees (such as hiring, firing promotions, or assignments).

Let’s look at each of these requirements.

Supervision

This requirement means just that.  Supervision must be a regular part of the employee’s job, and must be of other employees.  Non-employees do not count.  The requirement for two or more employees refers to two or more full-time equivalent employees.  Therefore this requirement could be met by supervising 4 part-time employees working at least half the full time hours.

Management

Merely supervising the day to day duties of employees is not enough.  The employee must have management as the primary duty of the job.  In California this spelled out as being at least 50% of the employee’s work time.  Typical management duties are considered to include:

  • interviewing, selecting, and training employees;
  • setting rates of pay and hours of work;
  • maintaining production or sales records;
  • appraising productivity, handling employee grievances or complaints, or disciplining employees;
  • determining work techniques;
  • planning the work;
  • apportioning work among employees;
  • determining the types of equipment to be used in performing work, or materials needed;
  • planning budgets for work;
  • monitoring work for legal or regulatory compliance;
  • providing for safety and security of the workplace.

Input into Personnel Matters

While the employee may not be the final decision maker on personnel matters, they should be involved in make recommendations regarding hiring, firing, promotions and demotions.  Higher management may make the final approval of such recommendation.

Conclusions

What you call a position does not have any weight when it comes to the exempt classification.  Accurate job descriptions and regular review of job duties will help companies correctly classify their employees and protect them from the inevitable audits that will be occurring with the new focus on overtime.