The U.S. Department of Labor (DOL) recently announced a few updates to overtime rules within the Fair Labor Standards Act (FLSA). The final rule, effective December 1, 2016, more than doubled the salary threshold for the overtime exemption from $23,660 to $47,476, annually. It also requires that the salary threshold be updated every 3 years, based on wage growth over time.
The rule was written with low to middle-income employees in mind and is an attempt to increase largely stagnated wages. The changes don't create any guarantees, but they do allow an estimated 4.2 million workers to be eligible for overtime pay.
The impact could be either positive or negative:
- Employees could get a small pay raise to push them above the threshold.
- Employees might see their hours limited or heavily monitored.
- Employers will begin paying overtime for more workers.
- Employers will have to adjust their benefit strategies to stay compliant with new regulations.
The level and availability of employee benefit plans is largely dependent on the accuracy of employee reporting and classification. While some benefits are mandatory under federal or state law such as Family Medical Leave Act (FMLA), others, like disability and dental insurance for example, are subject to review.
In order to avoid costly fines and penalties, employers must determine their options and ensure compliance through a 4-step process: (1) educate themselves on any rule changes and make sure there is an understanding of what needs to be addressed, (2) arrange a list of deadlines and requirements needed to meet government mandates, (3) act quickly as the deadline is approaching in December and the sooner they adapt their policies, the less at risk they will be for non-compliance, (4) communicate changes to all employees and explain any direct or indirect effects to their bonuses and pay.
Bukaty can help adapt your policies to the new regulations and ensure ongoing compliance.
For questions or concerns, contact us at 913.345.0440.
