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Employers should prepare for FLSA overtime rule changes
By Katherine Fechte on May 16, 2016 at 3:42 PM

It is no secret that the U.S. Department of Labor is expected to release the final rules related to the Fair Labor Standards Act (FLSA) soon — possibly sometime this month. The rules, which could make millions of more employees eligible for overtime, may also make compliance more difficult for employers and business leaders in their classification of employees.

As the rules currently stand, the minimum salary threshold for employee exemptions from overtime pay is $23,660 per year ($455 per week). The suggested new threshold of $50,440 ($970 per week), which was reportedly proposed to be lowered to about $47,000 last week, amounts to more than a 100% increase above the current minimum. Additionally, the current “highly compensated employee” exemption would increase from $100,000 to $122,148 per year. According to the Department of Labor, as many as five million Americans who are currently exempt could become eligible for overtime. 

In addition to their effect on employers, the final rules could also force many reclassified employees to change their working habits, especially those who work from home. Before, telecommuting employees likely did not have to report or clock their hours, so long as they were getting the job done. Now that many at-home workers could become classified as nonexempt under the new rules, employers may not wish to shoulder the burden of monitoring and compensating for hours worked.

It is anticipated that employers will have 60 days to comply with the new regulations, otherwise, they may be subject to fines and penalties. Some ways employers can stay on top of the changes include: reviewing and auditing the status of their current employees, creating a schedule to update positions, adopting time-tracking technologies and policies, and focusing on training for both management and employees to help them understand the changes.

If you have questions about the final rules, the classification of your employees, or other FLSA compliance issues, our attorneys in the Employment & Labor Practice Group can help you navigate these changes.

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