Changes to the FLSA white collar exemptions take effect December 1, 2016. This week’s Tip reminds you of the changes, and provides a list of useful resources to help you ensure your organization’s compliance by the December 1, 2016 deadline.
Changes to the FLSA’s White Collar Regulations. Briefly stated, the final regulations make the following changes:
- The new regulations impact employees who are exempt from overtime under the administrative, executive, professional (excluding doctors, lawyers and teachers), and computer related professional (if the employer is choosing to pay on a salary basis) exemptions. Remember: Outside sales workers are not subject to the salary basis or salary level tests, and are not impacted by the changes.
- The new standard salary threshold for the impacted exemptions above is $47,476/year ($913/week).
- The final rule increases the annual compensation level for Highly Compensated Employees to $134,004/year.
- The salary thresholds will automatically increase every three years beginning January 1, 2020.
- Employers are allowed to use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the salary in the standard salary test. That is $91.30 per week or $4,747.60/year.
Next Steps. Take the following proactive steps to help ensure compliance with the new FLSA regulations:
· Use Navigator OT to assess exempt status. We previously sent you an email link and credentials to access our Navigator OT exemption analysis tool. This tool helps you assess the exempt status of employees. Please contact your service team if you need or have forgotten your user ID and/or password for the Navigator OT exemption analysis tool.
· Use the WFN Salary Threshold and OT Cost Comparison worksheets to identify impacted employees (earning less than the new threshold), and to help measure the financial impact of reclassifying employees to non-exempt status or raising salaries to the new required threshold
· Review our FLSA Compliance Toolkit. We have also previously provided you with a toolkit containing an overview our people and technology solutions to help you comply with the new regulations, best practice guidance, and sample employee communications.
· NEW! Leverage FLSA “Shorts” (on-demand videos). In cooperation with Jackson Lewis, ADP is pleased to present you with five brand new on-demand videos addressing some of your most frequently asked questions. The five videos can be accessed by clicking the hyperlinks below (the videos are hosted on an ADP YouTube page).
· The New FLSA Salary Basis Test Effective December 1, 2016
· Best Practices for Communicating with Employees Impacted by the New FLSA Regulations
· Overtime Myths and the FLSA
· Sales Employees and the FLSA
· FLSA Coverage of Non-Profits and Churches