The Fair Labor Standards Act (FLSA), first enacted by the United States Congress in 1938, sets standards for basic minimum wage and overtime pay. The FLSA requires employers to pay employees who are not exempt from overtime at least one-and-a-half times the non-exempt employee’s regular rate of pay for hours worked over 40 in a work week.
While changes to the FLSA’s overtime policy have been a topic of discussion since 2016, recent news has brought them back to the forefront of conversation for many business leaders and HR professionals.
Here are the potential changes in the overtime laws, along with a few insights to help you proactively prepare.
FLSA Changes in 2019?
FLSA changes have been on the table since 2016, when the Department of Labor proposed a rule that would raise the salary threshold on who would be eligible for overtime—from $455 per week to $913 per week. However, the increase never went into effect. It was blocked in November 2016 by a federal judge in Texas.
Since then, the Department of Labor (DOL) has not yet made its final decision on what changes to implement. And, last fall, the DOL announced its plan to propose new regulations governing overtime exemptions under the FLSA in March of 2019.
While there has been much speculation as to what the new minimum might be, most experts expect an increase in the minimum salary for exemption to fall somewhere in the low-to-mid $30,000s.
How Can You Prepare for FLSA Changes?
If your business could be affected by a rise in the salary threshold for overtime (currently $23,660 a year), there are a few things you can do to avoid getting slammed with extra expenses:
- Be diligent about employee time tracking. Did you know that employers are required to track time for all non-exempt employees and keep those records for two years? If the words “organized,” “accurate,” and “easily accessible” don’t apply to your current method of timekeeping, it’s time for a change.
- Proactively evaluate non-exempt employee time. Closely monitor how many hours non-exempt employees work, and limit their hours to 40 per week. You might even consider broadening your view to include employees that would fall under the new cap. This will help you get a good sense of potential increases in overtime pay.
- Weigh the costs of providing a pay increase. If your employees become eligible for overtime under the new regulations, consider increasing their salaries to exceed the new threshold if their duties and responsibilities meet one of the job duties tests under the FLSA to qualify for exemption.
- Consider alternative options that would be beneficial for your employees. Rather than making a rash decision, it’s important to talk to your employees about their preferences when it comes to altering their compensation. You can consider working out a schedule that doesn’t incur overtime hours but still meets their financial needs.
FLSA in 2019: Don’t Go At It Alone
Maintaining compliance with FLSA standards might seem overwhelming. However, don’t feel like you must figure it out on your own. There are several ways our team at LBMC Employment Partners can help.
Whether you’re looking for a user-friendly time-tracking solution or interested in exploring ways to avoid potential penalties, don’t hesitate to contact your local LBMC Employment Partners representative.