compliance hr webinar: the final countdown: 90 days to overtime compliance
TRANSCRIPT
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THE FINAL COUNTDOWN: 90 DAYS TO OVERTIME COMPLIANCE
August 2016
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Lori BrownPresident
ComplianceHR
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Quick Recap – What’s Changing in a Nutshell
Steps to Compliance
Using Navigator OT to Beat the December 1 buzzer
Q&A
AGENDA
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EXEMPT VS. NON ‐EXEMPT
The Fair Labor Standards Act requires employers to pay “nonexempt” employees overtime pay for all hours worked over 40 in a workweek.
“Exempt” executive, administrative, professional, outside sales and computer employees need not be paid overtime. To be exempt, employees must generally satisfy three tests:
Currently, employers must pay employees at least $455 per week (the minimum salary requirement) to qualify for the executive, administrative, and professional employee exemptions.
With very limited exceptions, the employer must pay employees their full salary in any week they perform work, regardless of the quality or quantity of the work.
To qualify for an executive, administrative or professional exemption an employee must meet specific duties tests.
1 Salary‐level test 2 Salary‐basis test 3 Duties test
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CHALLENGES FOR EMPLOYERS
Many employers struggle with properly classifying their employees as exempt or non‐exempt from overtime.
The new rules will likely exacerbate this struggle for many employers because they may be forced to reconsider classification of exempt employees whose salaries fall below the proposed minimum threshold.
70%
The DOL estimatesthat as many as
of employers are not in full compliance with the FLSA.
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Tammy McCutchenVP Strategy, ComplianceHR
Littler Principal
Former Administrator, US‐DOL, Wage & Hour Division
Author, 2004 Revisions to White Collar Exemptions
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Effective Dec 1, 2016 Minimum salary level increase
Some bonuses and commissions can count toward the minimum salary level
Salary levels will be increased automatically every three years
WHAT ’S CHANGING?
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$455 $23,660
$47,476$913
Current December 1, 2016
MINIMUM SALARY LEVEL
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Nondiscretionary bonuses, commissions and other incentive payments if paid at least quarterly can satisfy up to 10 percent of the minimum salary requirement
BONUS & COMMISSIONS
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Each workweek, the employer must pay the exempt employee a salary of at least 90% of the minimum salary level – $821.70 ($42,728.40 annualized)
At the end of the quarter, if that salary plus all bonuses and commissions paid during the quarter do not equal $11,869 ($47,476 ÷ 4), the employer has to make up the shortfall in the first pay period of the next quarter.
HOW WILL THIS WORK?
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The salary levels will automatically increase every 3 years, beginning January 1, 2020
DOL estimates that the 2020 minimum salary level for exemption will be approximately $984 per week ($51,168 annualized)
DOL will provide 150 days notice of the new salary levels before the January 1st effective date in the Federal Register and on the web at www.dol.gov/whd
AUTOMATIC SALARY INCREASES
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OPTION 1 Raise Exempt Employee’s SalariesIf you have exempt employees that are paid less than the proposed minimum, you can raise their salaries to the new requirement. If you elect this option, it is best practice to review their job duties to ensure they continue to qualify for these exemptions.
OPTION 2 Reclassify Employees as NonexemptIf exempt employees don't meet the new salary requirement, you can reclassify them as nonexempt and pay them overtime whenever they work more than 40 hours in a workweek.
WHAT ARE YOUR OPTIONS?
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The first‐of‐its‐kind, award winning suite of intelligent applications delivering expert guidance at internet speed and scale
THE FLSA SMART SOLUTION
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Salary or Overtime Pay?The OT Cost Estimator can help you decide:
How much will it cost to increase salary and maintain the exemption?
How much would it cost to pay overtime?
How can I minimize increases in labor costs?
OT COST ESTIMATOR
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WHAT ELSE DO I NEED TO DO?
1. Conduct a review to identify employees who may not meet the duties tests required for exemption
2. Develop new compensation plan for the reclassified employees
3. Review wage-hour policies and processes4. Communicate the changes5. Train the reclassified employees and their
managers
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Exempt or Non‐Exempt? Online exemption analysis
Expert level guidance on exemption decisions
Assessment in as little as 15 minutes
Tool applies federal and state exemptions tests, and over 2,000 reported court decisions and DOL opinion letters
Provides suggestions to lower risk of misclassification
NAVIGATOR OT
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BUILDING & TESTING THE APP
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The new law provides a unique opportunity to get your house in order
Through traditional methods, exempt audits are costly & time consuming – can take up to 6 months
Change management/communications take time
Diagnose your vulnerabilities quickly and cost effectively
WHY SHOULD I USE NAVIGATOR OT?
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Effective date for compliance
W
Use Navigator OT and OT Cost Estimator
DOL published the new overtime regulations
T IMELINE & NEXT STEPS
Now
May 18, 2016
December 1, 2016