As just about every employer knows, one of the later acts of the Obama Administration last year was to enact new Department of Labor standards for classifying employees. These standards, a major change to the FLSA or Fair Labor Standards Act, reflected a revision of the white-collar overtime provision. The rules, expected to go into effect in December 2016, were put on hold thanks to a federal judge in Texas.
So what does this mean for you and your staff? Can you go back to the old classifications or do you need to be even more careful? Explore the effects the holdup on the FLSA overtime changes and employee classification rules will have, and what you need to know to keep in compliance with these changes.
New Employee Classification Rules
Essentially, the FLSA overtime changes raised the cap for overtime under employee classification rules to $47,476 per year, meaning those who make less than that can no longer be classified as salaried, or exempt from overtime pay.
Employers and human resources professionals across the nation scrambled to crunch the numbers and work out what this meant for their businesses. Many chose to cut overtime, to reduce responsibilities, to require more work be done in the same number of hours, or even engage in layoffs rather than pay additional overtime. Others were more able to roll with the punches.
Texas Judge Issues Injunction
Before the December 1 start date for the new rules, a Texas federal court issued an injunction against the DOL, putting the new FLSA rules on hold. Since the injunction is only preliminary, the DOL can still appeal the ruling, but what it means for human resources departments and businesses is that the future is still uncertain.
The Effect on Business
The new rules have an enormous effect on the way we run businesses, particularly white collar ones. We’re hearing a lot of talk about the worry businesses have about overtime from a financial sense, but what about employees from the standpoint of flexibility? Many salaried workers choose these jobs for the flexibility they offer, and under the new rules, many will lose that flexibility.
Under the new FLSA, the DOL is likely to change the way we view work. Soon, contacting your employees via text or email after hours could become part of their hourly compensated work. We’re seeing a move toward re-separating work and home life, for better or worse.
Employers have two options under the new rules: pay overtime or increase salaries. For many employers, increasing salaries is the better option all around. You’ll end up paying less than you do in overtime, and your staff members get to keep their flexibility.
In the end, your best bet, if you’re not sure how to proceed, may be to seek the services of a professional human resources consulting firm. At QuadWest, we can help you deal with FLSA overtime changes and employee classification rules to manage risk and make sure you stay solidly in compliance with all federal regulations, whatever they may be in the future. For more information, give us a call today!