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UPDATE: DOL’s Proposed Changes to FLSA Overtime Rules Expected to Be Published in July 2016 and Become Effective in September 2016

U.S. Department Solicitor of Labor, Patricia Smith, recently announced at the 2016 American Bar Association’s Midwinter Meeting that the final rules regarding the amendments to the FLSA White Collar Exemption Regulations will be published in July 2016. Solicitor Smith also stated that the regulations will become effective 60 days after publication. Thus, the changes could become effective sometime in September 2016.

We discussed in a prior update, the proposed regulations will more than double the FLSA’s minimum salary basis test for most FLSA exemptions. The proposed change would immediately entitle approximately five million additional workers to overtime pay, which will obviously have a huge impact on employers’ ability to treat certain white-collar employees as exempt. Such an increase means 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.

Employers should start thinking now about how these changes would affect their current workforce. 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, penalties will likely increase for misclassification of employees given the increased salary required for FLSA exemptions. Thus, we suggest consulting your DeWitt employment attorney before implementing any changes to address these new rules.

About the Author

Barret Van Sicklen is an attorney practicing out of our Madison office. He is a member of the Labor & Employment Relations, Litigation, and Real Estate & Land Use practice groups. Contact Barret by email or by phone at (608) 252-9386.

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