DOL's ever-changing FLSA regulations: What now?

by on March 30, 2009 · 0 Comment POSTED IN: HR Info Center

How HR can prepare for the new FLSA compliance standards

Department of Labor’s long-awaited, much-ballyhooed FLSA regulations change will catapult wage and hour law into the 21st century. With millions of workers affected, it’s likely your firm will face making some changes.

Here are some significant aspects of the new FLSA regulations, along with action items to help you reclassify jobs, revise policies and avoid fines and other penalties for noncompliance.

Reclassify managers

Under the new FLSA regulations, employees who earn at least $455 per week ($23,660 annually) qualify for an executive exemption if their primary duties meet all three of the following criteria:

  • Manage the entire organization or a department or division.
  • Direct at least two full-time employees.
  • Hire, fire, promote and make decisions about job status.

Action item: Review the job description of any manager at your firm with hiring and firing authority. Those who earn $23,660 or more qualify for the executive exemption. Those who earn less – even though they meet the management criteria – are entitled to time-and-one-half for hours worked over 40 in a workweek.

Identify exempt administrators

Workers-who earn at least $455 per week-qualify for an administrative exemption under FLSA regulations, if as part of primary duties, they:

  • Perform nonmanual functions directly related to management or general business operations
  • Exercise discretion and independent judgment on significant matters.

Action item: Consider creating a cross-functional team, taken from managers across the organization, to review job descriptions and classifications. Make everyone understand the nature of “discretion and independent judgment” as it related to FLSA compliance. HR Info Center has reported on numerous lawsuits where the definition of “discretion and independent judgment” has been misinterpreted by line managers and workers. This exposes the company to costly FLSA compliance investigations and litigation with DOL.

Payoff: A consensus definition of administrative duties, applied consistently, should give you much-needed ammunition in persuading a court that an administrator’s job involved discretion and independent judgment.

Review professional salaries

According to the new FLSA compliance standards, workers are employed in a professional capacity if they’re paid a salary of at least $455 per week and their main duties require at least one of the following:

  • Knowledge of an advanced field or science usually acquired through a lengthy course of study. A biologist with a Ph.D., for example.
  • Imagination, creativity, originality or a specialized talent such as writing, design or drawing. A creative director, for example.

Action item: Review all relevant jobs and salaries. Ask the team to discuss and agree on which workers (earning at least $455 per week) use imagination and originality in their primary duties.

Docking salaries changes in new FLSA regulations

The new FLSA regulations on overtime don’t change the old definition of “payment on a salary basis.” But there’s one significant exception: disciplinary salary deductions.

Employers may dock exempt employees suspended for one or more full days for workplace rule violations, without worrying that the discipline will convert a worker to hourly status in the soon to be released FLSA compliance standards.

According to the DOL web site, in the new FLSA regulations, “workers earning less than $23,660 per year – or $455 per week – are guaranteed overtime protection. This will strengthen overtime rights for 6.7 million American workers, including 1.3 million low-wage workers who were denied overtime under the old rules.”

Source: U.S. Department of Labor.

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