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April 1, 2014

New Overtime Regulations on the Horizon!

Filed under: Compensation,FLSA9:11 am

Nearly all businesses are required to comply with the regulations under the Fair Labor Standards Act (FLSA).  On March 13, President Obama directed the Secretary of Labor to update the FLSA to meet several criteria:

  1. Update existing protections in keeping with the intent of the FLSA;
  2. Address the changing nature of the American workplace; and
  3. Simplify the overtime rules to make them easier for both workers and businesses to understand.

What does this mean for American businesses?   In a nutshell, it means that thousands of employees who are currently considered exempt under the FLSA may become eligible to receive overtime compensation for hours worked over 40 in a week.   According to Alfred B. Robinson Jr., former acting administrator of the Wage and Hour division of the US Department of Labor (DOL), the administration is focusing heavily on the salary basis test of the regulation which currently states that an employee must earn at least $455 per week to be considered exempt.  The administration has said that “If the 1974 salary basis test had been indexed, then they would approach approximately $1000 per week in today’s dollar.”

In addition to the salary basis of the exemption, the DOL will also closely examine the primary duties test to ensure that jobs fit into the defined executive, administrative, and professional employee white collar exemptions.  HR professionals should continue to carefully evaluate new positions to determine if they do qualify for a white collar exemption based on the types and frequency of duties being performed.   Once these new regulations are implemented, there will be far reaching implications for HR staff, including new job evaluations, salary structures, and training to managers overseeing newly non-exempt staff.

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