Patricia Smith, U.S. Department of Labor solicitor, recently announced the final rules regarding the changes to the FLSA White Collar Exemption Regulations will be published in July 2016. She also indicated the regulations will be effective 60 days after their publication. This means the changes will become effective no later than September 2016.
As we discussed in prior posts, the DOL proposed regulations will significantly increase the salary basis test for most FLSA exemptions. The proposed change would make several million more employees eligible for overtime payments, which could have a significant impact on an employer’s bottom line. An increase in the salary basis test for most FLSA exemptions will mean employers will need to carefully evaluate their currently exempt employees to determine which, if any, will be impacted by the new regulations.
If an exempt employee does not meet the anticipated salary threshold, employers should consider whether the anticipated financial impact will be greater by raising the salary of the employee to meet the new exempt standard or by allowing the employee to be eligible for overtime and more closely managing worked hours. Additionally, the increased salary required for FLSA exemptions will likely result in increased liability for misclassification of exempt employees. Accordingly, employers should take this opportunity to review FLSA exemption classifications to ensure exempt employees actually qualify for the FLSA exemption at issue.
While these changes are looming, there is still time for employers to prepare.