Horizon Payroll Blogs

Facts about the FLSA, state requirements, and OT exemptions

Is hiring seasonal employees part of your strategy for surviving your busy season? Chances are you’ve come to depend on these workers each year, and they probably rely on you for the opportunity to earn extra money in a set period of time.

There’s no doubt it’s a profitable, if short-term, relationship between employee and employer. Don’t damage it by failing to pay overtime when it’s due. Read on to see if your seasonal employees qualify for overtime pay.

Are you a business owner? Or maybe a supervisor with hourly employees? Are you running shifts that vary according to your staffing needs? Then you're probably well aware that mismanagement of overtime can increase labor costs in addition to having significant compliance implications.

It's been a strange few months. As we told you in July, FLSA changes are on their way. But these changes seem to be, well, changing.  Here are the latest updates, on both the rule and various attempts to thwart it.

As of now, the rule changes outlined below are set to go into effect on December 1, 2016. This is despite the following.

• The House of Representatives passed a bill on September 28, 2016 that would delay FLSA changes for six months. However, H.R. 6094 is unlikely to be signed into law before December 1, if ever.
• On September 20, 2016, 21 states filed a lawsuit, joining the Chamber of Commerce, the National Federation of Independent Business, the National Retail Federation and other business groups, alleging the changes are unconstitutional. According to the Society for Human Resource Management, however, these lawsuits are unlikely to move forward. 

So - what's an employer to do? The experts agree - prepare for the FLSA changes as if they are indeed going into effect December 1. 

You've probably heard a lot lately about the FLSA rule changes. I know we've blogged about it (along with many others). We've also heard that the rule changes are confusing. So - we're setting out to set the record straight, along with a few survival tips, so we're all ready on December 1st.

What It Is:

As we said, the Department of Labor (DOL) recently unveiled the newest addition to the Fair Labor Standards Act, a law that has been updated multiple times over the last several decades. With the new rule, the DOL raises the minimum salary threshold for overtime exempt workers within companies with over $500,000 in annual revenue. The two main types of salaries are:

1. Exempt from overtime (these employees don't qualify for overtime)
2. Non-exempt from overtime (these employees do qualify for overtime)

Although many employees believe they belong to the first group, salary exempt, a lot fall under the salary non-exempt category. This is usually because they do not fall under the true definition of a manager (see the What It Boils Down To section below).

Did you know the Department of Labor (DOL) has proposed some big changes to the Fair Labor Standards Act? You need to be ready for these changes, as they could go into effect later this year. The DOL estimates they will effect 4.6 million workers in the first year alone.

According to the DOL, key provisions of the proposed rule aim to:

1. set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers ($921 per week, or $47,892 annually);
2. increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
3. establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption.