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Major Changes in Overtime Regulations Coming Soon

Increased-OvertimeIncreased overtime availability is currently in the works. Set in motion by the Obama administration, these amendments to current Fair Labor Standards Act (FLSA) regulations inevitably mean big changes for employers regarding payroll, healthcare, and various other aspects. According to a recent post by HR Morning there are two big questions on employers’ minds:

  1. How soon will these changes take place?

According to the Department of Labor (DOL), changes can be expected as soon as the next few months and Tammy McCutchen (former administrator of the DOL’s Wage and Hour Division) predicts that the final rules will move fairly quickly. She foresees that the final rules could be settled and published as soon as September of 2015 with them going into effect January 1, 2016.

  1.  How strong will the impacts of these changes be on employers?

This question is still being fully evaluated. The Department of Labor (DOL) Secretary Thomas Perez is looking at a couple of key aspects of overtime eligibility regulations.

  • First, legislation must decide what the salary level should be moving forward. According to current overtime regulations, the salary level is $455 per week or $23,660 per year. Jared Bernstein, a former White House economist, recently proposed the limit be increased to $984 a week, or roughly $50,000 a year. This would in turn force many employers to change the status of employees that may have previously been classified as exempt. The other thought is to implement California’s current salary level of $570 per week, this method relies on auto-corrections for inflation.
  • Second, changes must be made to the duties test (an FSLA guideline outlining job duties that qualify a person to be exempt, read more here.) The DOL is likely to narrow this test and make regulations more straightforward. Adoption of the duties test used in California is in serious consideration. This would call for managers to spend more than half of their time supervising employees.

McCutchen notes that effectively restructuring the current FLSA (Fair Labor Standards Act) rules and regulations is no small task. The DOL will be consulting employers to aid in a smooth transition with the hope of making the new rules as clear and efficient as possible.

How do you think the DOL could make this shift in policy regulations as smooth as possible for employers?

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