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Monday HR Minute: Proposed Changes to Overtime Exemption
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Proposed Changes to Overtime Exemption

On Thursday, March 7, 2019, the DOL announced its recommended revisions to the Fair Labor Standards Act (FLSA) “overtime rule”.  If finalized, these revisions would increase the minimum salary level threshold for exempt employees from $23,660 per year (or $455 per week) to $35,308 per year (or $679 per week).  This salary-threshold increase is expected to impact a million workers who could become non-exempt.

The FLSA mandates employees must be paid minimum wage for all hours worked and time-and-a-half their hourly wage for all hours worked over 40 in a workweek.  However, it also establishes exemptions that make certain employees “exempt” from minimum wage and overtime pay obligations.  These exemptions include executive, administrative, professional, computer, and outside sales, as well as some other specific groups.

Exempt employees must meet criteria including regularly performing exempt-level job duties and receiving a guaranteed wage of a certain amount. The latter is what the DOL is proposing to change.
These proposed revisions will also increase the salary level for employees under the “highly-compensated” exemption from $100,000 per year to $147,414 per year, as well as allow employers to credit some non-discretionary bonuses and incentive payments toward as much as 10% of an exempt employee’s salary level. 

The good news: These revisions are not expected to change the current “exempt” duties criteria or tests.

What to do now:

These revisions are not finalized so it is possible they will be overturned like the revisions issued in 2016 which never went into effect. However, while companies do not have to increase salaries immediately, they should be reviewing the compensation of their exempt employees to be prepared if this becomes law in a few months.

While companies only need to review and adjust salary levels at this point, employers may want to use the opportunity to verify that their exempt employees meet the duties expectations as well in case the publicity brings more attention to exemption status (and therefore increased wage-and-hour claims) as after the 2004 revisions.

Note: This impacts federal law only.  Employers in states which have different wage-and-hour laws must defer to whichever is more beneficial to the employee.

As always, Affinity HR Group will stay on top of these developments and are ready to answer any questions you may have.

 

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And Affinity can ensure your HR practices & policies are compliant and costs a fraction of the price of other national providers, such as Paychex & ADP. 

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The Monday HR Minute, brought to you by Affinity HR Group, is designed to provide you with practical, applicable human resources and management advice and information in a format that will take you 60 seconds or less to read.  We believe that by dedicating just one minute a week to thinking about people management practices, business owners and managers can make enormous strides in improving workplace performance.
Affinity HR Group is a full service human resources consulting firm that specializes in advising small and medium-sized enterprises. Our services include recruiting and selection, HR policies and compliance, ad hoc HR support, compensation and performance management, and training and development. We are an endorsed HR partner of a number of leading national trade associations and offer free initial consultations and discounted services to their member companies.
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This e-mail may contain general information about legal matters. Affinity HR Group does not provide legal counsel. The information provided should not be considered legal advice and should not be relied on as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about this content or any legal matter you should consult your attorney or other professional legal services provider.
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