Upcoming FLSA Overtime Changes: Four Steps for Employers to Prepare

Courtesy of HR Support Center

2016 FLSA changes

In the coming weeks, the Department of Labor is expected to publish new overtime rules that could impact five million U.S workers. These updates would dramatically raise the minimum salary requirement for affected employees to qualify as exempt or not subject to overtime pay. It is yet unclear when the final rules will exactly be announced, but the good news is that employers can take important steps now to get ready for that change.

What is the proposed change?

The proposed changes to the Fair Labor Standards Act (FLSA) would more than double the salary threshold of millions of white collar workers from $455 a week to $970 a week in order to qualify for exempt status per the rules of the FLSA. It is possible the amount may be different when the final rules are announced sometime this spring.

What does that change mean for employers?

Millions of employees will either need to be reclassified as non-exempt or have their salaries raised to the new threshold level. Employers who fail to do so may face claims for back pay, interest, and other penalties. Under the proposal, the exempt salary threshold would increase automatically each year.

What is the timeline?

Although the timeline for the upcoming FLSA overtime changes is still uncertain, it could be anticipated to look something like this:

2016 FLSA change timeline

What can employers do to get ready for these changes?

There are four steps that every employer should follow to prepare for the upcoming FLSA changes, as follows:

  • Identify which employees may be affected
  • Determine the hours worked by affected employees
  • Consider appropriate compensation strategies
  • Look at the big picture and refine company policies as needed

The proposed FLSA changes are leaving employers with a lot to consider. While talking with your employees about possible compensation changes may be a bit uncomfortable, it’s best to start those conversations now in order to get ahead of any overtime decisions before they are announced.

For more details on these four steps as well as some helpful tips and examples, click here to download a copy of our white paper or contact a PayNorthwest specialist toll-free at +1.866.729.6920.