Federal Overtime Regulations and What They Mean for Your Company

by Christopher Fusco, CCP, GRP, SPHR - November 18, 2016
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Starting on December 1, 2016, employers across the country will have to contend with new federal overtime regulations, when the provisions to the Fair Labor Standards Act (FLSA) go into effect. As with any large-scale change, employers may struggle to adapt; particularly since a large number of their employees will now classify as non-exempt for overtime pay. Naturally, several questions will arise that could have a critical effect on businesses.

To help answer these pressing questions, the Boston Business Journal recently held a Table of Experts event, and Salary.com’s own Mark Szypko, Vice President of Compensation Strategy, was there to share his expertise.

Mark and his fellow panelists were asked a wide range of questions about the updates to the federal overtime rules, how it will impact companies, and what they can do to prepare for the December 1 deadline. As Mark explained, every job in an organization is non-exempt, unless proven otherwise, with the burden of proof squarely on the employer to secure an exemption for a particular position. However, determining exempt vs. non-exempt status for employees has become much more challenging with the new changes to the FLSA, the first changes introduced since 2004.

With these new regulations, the minimum salary to be non-exempt has more than doubled from $23,660 annually to $47,476, resulting in many more employees who are eligible for overtime. But pay level isn’t the only qualification used to determine exempt or non-exempt status. To be exempt, employees must not only make more than the $47,476 threshold, but they must also receive a fixed salary not subjected to reductions based on quality or quantity of work performance. Moreover, they must also satisfy the duties test, showing that the actual duties performed in the role meet the standards for various job families.

Mark and his fellow panelists also addressed the legal issues and regulations employers should be aware of in light of the new laws – and the risks for those that fail to comply. As the deadline for accounting for these changes is right around the corner, organizations must act today to ensure they are well prepared.