Over the past year, the US Department of Labor has been revising the Fair Labor Standards Act (FLSA), which governs which positions must be paid overtime. Your payroll firm and employment attorney have probably been pushing you to review your practices. The proposed rules got a lot of comments, over a quarter million, and now the new rules believed to be coming out this month with a short implementation period. Rumor has it that the salary level test will be $47,000 instead of the originally proposed $50,440.

Many small organizations had ignored the duties tests of the FLSA and called all employees exempt from the FLSA based on the old test of $23,660. In reality, exemption from FLSA is based on the duties of the position and the salary test.

What Should You Do Now?

1. Look at your existing position descriptions and requirements.

Are they accurate and current? If not, update them. Look at the duties test first and determine if the positions are in fact exempt from the law. A simple checklist: https://www.dol.gov/whd/overtime/fs17a_overview.pdf

2. Review the pay of individuals in each position you consider exempt from FLSA using the duties test.

Assess what you will do with each if their current salary is less than the final salary test. In some cases, it may make sense to raise pay. In others, it may make more sense to reclassify the position as non-exempt and control overtime.

3. Consider your culture.

If you have been paying all employees on a salary basis, you may wish to continue to do so. This can be done whether employees are exempt or non-exempt. If your organization pays at the end of a specific pay period through the same date, and you wish to include non-exempt employees in a salaried pay, most companies then pay overtime in the paycheck following the period covered.

Although there are old-line companies which do have separate benefits for employees in non-exempt positions, this is really unusual in smaller organizations – and usually too much work and expense to consider. It is also a way to really divide your employees and I do not recommend considering it as a way to save money.

Be Prepared

Once the FLSA changes are announced, you can expect they will get a lot of press coverage. Be ready to tell your employees when and how you will address the issues. Have a plan started so that you can respond effectively and quickly. As always, am happy to work with you to resolve your concerns and meet your needs.