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Changes to FLSA and How to Prepare Your Employees
This Final Rule changes to the Fair Labor Standards Act updates the salary level required for exemption. These changes go into effect December 1, 2016 and the result is that millions of employees will have to be reclassified as non-exempt.
The changes are as follows: (1) It sets the standard salary level at $913 per week or $47,476 annually for a full-year worker; (2) It sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to $134,004; (3) It establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption; and (4) It amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
The federal government estimates that as many as 4.2 million, the number of currently exempt workers in the United States, will now become non-exempt under the Final Rule on white-collar exemptions under the Fair Labor Standards Act.
Here are a few tips for employers to make the transition to “new non-exempt” less painful: (from JD Supra)
Let the employees know that the reclassification was the government’s mandate. Let them know the reclassification was required by a change in the law.
Provide training on timekeeping issues. If you decide to let the employees keep their flexibility, they’ll have to understand the importance of accurately documenting their time worked – even if it’s something as “trivial” as taking a business call in the car on the way to work or answering some emails in the evening at home. This is a very hard habit to start.
Communicate that you want them to accurately post time. Many new non-exempt employees are going to want to keep doing their work the way they always have and not write down their time. Persuade the new non-exempt employees that they must post all hours worked. This communication will be an on-going battle.
Do not let the “new non-exempt” take off in the middle of the work day for personal matters, come in late or leave early without accurately posting. Many exempt employees are used to having the freedom and flexibility. If want to let the new non-exempt employees be flexible, that’s great, but they’ll need to accurately record their non-working time, too. If they’re being paid according to the fluctuating workweek method, then you’d normally have to pay them for a full week if they worked any time during that week unless the time off was covered by PTO.
Learn the FLSA overnight travel rules because you’ll need to apply them. The rules during the workday are relatively simple: Commuting time (between home and workplace) is generally not compensable unless work is performed, but all travel time that occurs “in a day’s work” (between worksites) is covered, even if no actual “tasks” are performed. Travel time between home and an off-site assignment may be at least partially compensable, depending on the length of the trip.
But if your new non-exempt has to go out of town overnight, then all kinds of crazy rules apply. Make sure you know them.