The Department of Labor (DOL) has finally issued long-expected changes to the regulations defining who is entitled to overtime pay under the Fair Labor Standards Act (FLSA). These changes will impact millions of employers. According to the DOL, 7.4 million employers could be affected by the changes, with 4.2 million employees becoming immediately eligible for overtime and another 8.9 million indirectly affected.
Here are the basics:
The new regulations go into effect on December 1, 2016, giving employers a mere six months to respond and make changes to their wage and hour practices to comply with the law.
Comment: What do these changes mean to your organization? First it means that employees making less than $47,476 need to be reclassified from "exempt" to "non-exempt." Secondly, these employees will now need to track all hours worked and be paid for all hours worked.
These changes will most likely mean an increase in complaints and litigation. Already wage and hour lawsuits are on the rise (up 450 percent since 2000) and represent the largest category of class action filings. The last time the rules were changed, in 2004, the number of wage and hour lawsuits increased significantly. All indications are that we will see another jump in filings this time around.
One silver lining to the changes is that they provide an opportunity for employers to reclassify workers who have long been misclassified. Employers can fix some long standing problems.
Weber Gallagher will be offering the same program on two separate dates to explain all you need to know about these key changes. Click here for the invitation.
Chelsea R. Seidel