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OT Regs: How it may affect your Company

DOL put on notice to revamp and modernize FLSA

It was the tweet heard ’round the world: #RaisetheWage – the president’s call for the Department of Labor to overhaul the current overtime regulations.

May we suggest a few alternatives:
◾#RaiseYourCompanysCosts
◾#RaiseFinancesWorkload, or even
◾#RaiseCFOsBloodPressure.

No one’s against people being compensated fairly for the work they do.

But a sweeping overhaul of such a complex and pervasive federal law will have massive fallout, financial and otherwise on companies of all sizes.

Here’s a rundown of what’s coming, the potential impact on your business and why you don’t want to wait to start moving on this issue.

Top target: the white-collar exemption

While not too many details have been released just yet, the president pressed Secretary of Labor Tom Perez to update and modernize U.S. overtime regulations. The White House also released a fact sheet justifying this radical move.

Obama’s three-step action plan:
◾Update existing protections in keeping with the intention of the Fair Labor Standards Act (FLSA).
◾Address the “changing nature” of the American workplace, and
◾Simplify overtime rules to make them easier for both workers and businesses to understand and apply.

How that will unfold remains to be seen, and the regs will be put out for public comment.

But one area seemed to get the bulk of the focus: the executive, administrative and professional or “white-collar” exemption from overtime pay.

According the fact sheet, currently just 12% of salaried U.S. workers are overtime-eligible under the FLSA.

The president believes a good portion of the remaining 88% should be eligible for additional compensation when they work extra hours.

That’s what the presidential order plans to correct, likely both in terms of the dollar threshold for what automatically qualifies for OT and what duties fall within the exemptions.

Your best first steps now

While it will take a little while to put in place, the administration has made it clear this is a top priority and wants the initiative fast-tracked (hence no legislation).

Which means that no company will want to wait until the rules are overhauled to start addressing this issue.

Your best place to begin: Look at your employees “on the edge.” You and your payroll staffers want to determine how many salaried employees currently just fall in the exempt bucket based on salary alone.

That will give you an idea just how much it could cost your company if the new regs raise the threshold by $100 per week, $200 per week, etc.

Next, take a look at everyone who falls under the white-collar exemption. Some of those are clear slam-dunks. But again look for those grayer areas that technically fall into exempt territory but could be considered otherwise, especially with a change.

It’s also smart to get a jump on your paper trail. Touch base with all supervisors of exempt employees to update job descriptions so they accurately refect all the work they currently do.

That way, when new regs are issued, you and your finance staffers won’t be left scrambling to comply. And stay tuned – of course, we’ll keep you informed every step of the way.

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