UPDATE: 2016 FLSA Overtime Changes


payrollStop the presses! The post below was our summary of the changes set to take effect starting December 1st in regards to overtime changes.

On November 22, a federal judge has issued a preliminary injunction bringing the December 1st roll out to a screeching halt. The path for appeal and eventual implementation is unclear at this moment,  but we will update this post as the situation evolves.

Our original post:

The salary threshold for employee exemptions for paying overtime have been increased effective December 1st, 2016. If you haven’t already considered the impact this may have on your business, time is running short to either make changes, find yourself out of compliance, or determine that no changes are necessary.

There are some circumstances where it may make sense to reclassify some employees by giving them a raise –  but be careful. Relying on the salary alone might not be enough to keep you out of hot water with the DOL. There are several nuances that can make this a bit more complicated. Some companies may need to hire additional part time help to prevent overtime, or budget for higher payroll to get compliant.

We understand and see firsthand that for many of our clients, payroll always has been and always will be the biggest expense on the P&L.  As those costs increase with higher minimum wages and new overtime rules, the importance of being lean on expenses in other areas is heightened.  We can help with reviewing your expense structure and helping you see where there may be a little fat to trim.

Another important aspect to note – while the Department of Labor (the federal agency) has always regulated this, they’ve hired thousands of additional auditors to review compliance in an area where they estimate massive levels of non-compliance exist.  It is likely they will be on the lookout for violators that can be made into an example. Don’t let that be you! One other thing to remember – while disgruntled employees have always been a problem for employers, workers are getting more savvy and the amount of press these regulations are getting means your workers are more likely to know the rules now than they did in the past.  And with the increased manpower the DOL will have, they will have a better ability to explore complaints, even with smaller companies – and I think it’s fair to expect that many complaints will be filed.

Why December 1st? The DOL hasn’t given a specific reason, but the holidays are prime time for overtime hours for seasonal workers.  Also, waiting until January 1 for implementation would mean the reporting that will drive their audits would not happen until April instead of in January when you file Q4 reports. If you’re unsure about your compliance level, talk to your payroll provider, familiarize yourself with the changes and be prepared for Q4 of 2016. If you’re not using a payroll service, taking extra steps yourself will be even more important, and it may be a good time to consider switching to outsourced payroll as both Paychex and ADP offer incentives at year end to get started with them.

If this describes your business you will want to take extra care to ensure compliance. Take a look at the DOL resources and other links below.  Questions about the OT rules or want to talk about where you may offset the increased payroll costs?  Give us a call – 253.234.5732.

 

DOL Job Description and Classification Fact Sheets

https://www.dol.gov/whd/overtime/fact_sheets.htm

Paychex Resources

https://www.paychex.com/articles/payroll-taxes/overtime-rule-faq

ADP Resources

adp-flsa-5-key-facts_page_1

 

 

adp-flsa-5-key-facts_page_2

Leave a Reply