UPDATE: Please Note: on November 23, 2016 a Federal Court in the State of Texas issued a nation-wide injunction barring the new minimum wage increases and other changes to the Fair Labor Standards Act known as the “Final Rule” from going into effect on December 1, 2016 – as originally planned. While it is likely the court’s decision will be appealed by the U.S. Department of Labor it is unclear what the fate of the law will be based on the incoming president/administration. We advise that companies continue to closely monitor developments with the Final Rule to determine how best to comply. In the meantime, the current Federal overtime rules remain in place.
One of the hottest and most pressing HR topics affecting us all are the changes to the Fair Labor Standards Act (FLSA). Don’t worry, we have you covered and can tell you what you need to know NOW!
Clarity kicked off its HR Breakfast Series last month where we set out to tackle some of the biggest HR challenges in today’s market. We kicked it off discussing the Fair Labor Standards Act (FLSA) updates that will affect every business! Joshua J. Spiegel, Esq. of Horzepa, Spiegel & Associates, P.C. gave us a detailed yet easy-to-digest overview of the FLSA, the changes, and how it will affect us all.
We caught up with him afterwards to get the heart of the most important facts we need to know and here is what he shared:
Clarity: “What is the easiest way to explain the FLSA in a few sentences?”
Joshua: “FLSA is a body of federal law that offers certain protections for those employees in the workforce who are considered to be “non-exempt” (i.e., covered) by FLSA. These protections include: (1) the payment of minimum wage as minimum compensation; and (2) the payment of overtime at 1.5 times regular pay for all hours worked over forty (40) in a workweek. FLSA additionally prescribes rules governing record keeping requirements for employers with respect to “non-exempt” employees and youth employment.”
Clarity: “What are the most important facts about the FLSA and the updates that we need to know right now?”
Joshua: “The most important fact to know is that unless an employee meets all the criteria of specific exemption, they are “non-exempt” and covered by FLSA. Often times employers do not pay attention to all criteria and rely solely on the fact that an employee is “exempt” because of the amount of salary earned or because they receive a salary rather than being paid hourly. While the amount of salary an employee earns is often a factor in determining whether an employee is exempt, it is typically not the only factor – especially for those employees working in office settings relying on a group of exemptions known as the “white collar” exemptions. Under the Final Rule which goes into effect on December 1, 2016, there will be major changes to the minimum salary requirements. While these new minimum salary requirements must be considered carefully in light of a company’s workforce, it is not the only criteria that will determine whether an employee is “exempt” or “non-exempt” under FLSA.”
Clarity: “What is the difference between exempt and non-exempt employees?”
Joshua: “Great question: this is often an area of confusion. At its essence, the difference between having an “exempt” vs. “non-exempt” employee determines whether FLSA requirements and protections apply to that particular employee. If an employee is “non-exempt” than FLSA applies and the employee must be paid at least minimum wage and overtime at 1.5 times regular pay for time worked over 40 hours per week. In addition, employers are required to comply with FLSA’s record keeping requirements for all non-exempt employees. In contrast, none of the protections (e.g., minimum wage or overtime) or requirements (record keeping) apply to those employees considered to be “exempt”. It’s important to remember that for purposes of FLSA, employees are non-exempt unless and until that employee meets all the criteria for a specific FLSA exemption. There are many exemptions under FLSA covering employees in a wide variety of professions and industries. It’s very important for employers to understand which exemptions generally apply to their particular business and be able to show that all employees they have classified as “exempt” meet all applicable criteria. If there are any questions about particular exemptions and applicability, they should consult with their counsel.”
Clarity: “Are there any actions people should be taking right now to ensure they are compliant?”
Joshua: “It’s very important to examine the current classifications of all current employees to make sure they are properly classified as either “exempt” or “ non-exempt”. It is also very important to examine internal job descriptions and employment policies to make sure they are consistent with these classifications and structured in a manner that gives the employer the ability to manage their exposure to overtime payment. This usually takes the form of a workforce audit and is performed by senior members of an organization handling human resources matters along side of counsel for the company.”
Clarity: “Are there any notable deadlines people need to know about?”
Joshua: “Yes. December 1, 2016 is the date the “Final Rule” comes into effect which will raise the minimum salary levels for those employees claiming to be exempt under certain exemptions (e.g., the white collar exemptions). Beyond that, the Final Rule also alters the current rules on the types of compensation employers can use to satisfy new minimum salary requirements. These minimum salaries will be “adjusted” every three years beginning as of January 1, 2020.
Joshua: “One last thing…It’s important to remember that states often have their own wage and hour laws along side of FLSA and in the event a particular state law is in conflict with FLSA, the law with the greater protection to employees will govern and control. Therefore it’s not enough to become familiar solely with FLSA but rather to understand how FLSA interacts with the state laws where a given employer and employees are located.”
Clarity: “Thanks so much Joshua for sharing your incredibly thorough insight! We are looking forward to sharing this with our HR community!”
So there you have it, the most important and up to date facts on the FLSA affecting every business right now!
If you have any questions feel free to reach out to us at Clarity at firstname.lastname@example.org or directly to Joshua J. Spiegel, Esq. at Horzepa, Spiegel & Associates, P.C. at email@example.com located at 44 Wall Street, 10th Floor, New York, NY 10005.
Disclaimer: This discussion is for general informational purposes only and is not intended to be and should not be taken as legal advice. If legal advice or other expert assistance is required, the services of a professional should be sought.