Just last month, a national HR outsource provider was fined over $1 million for back wages and damages because they failed to provide overtime to 267 salaried employees who were misclassified as exempt. If a HR provider misclassified its own employees, how sure are you that your exempt employees are truly exempt?
It was complicated before but regulations and compliance just got tougher. On May 18, 2016, the Department of Labor (DOL) released the final changes to the overtime regulations – the first major change to the Fair Labor Standards Act (FLSA) regulations since 2004. The most significant change is the increase in the salary level required for exemption from overtime. Effective December 1, 2016, the new minimum will be an annual salary of $47,476.
The implications for employers are significant and may include:
- Penalties for incorrect classifications and failing to pay overtime which could include severe fines, payment of back wages to employees, and even imprisonment
- Additional time and resources needed to review job descriptions and reassess the status of lower-paid exempt staff to ensure they satisfy the FLSA white collar exemptions test
- Increased employer costs due to significantly raising salaries to maintain exempt status or increased overtime if employees are reclassified as non-exempt, and
- Establishing time tracking systems as the number of non-exempt employees may significantly increase.
While compliance is complicated and non-compliance is costly, there is no need for panic. CCI’s HR consulting practice, a team of seasoned human resource and wage and hour experts, have been hard at work preparing for the release of these changes. We are here to support you with the necessary tools, resources and personalized help to keep you informed and to help you navigate the complicated months ahead.
CCI Consulting can help you avoid common mistakes during the classification process, such as:
- Relying on job title rather than job duties to determine if a position is exempt
- Relying on the job description alone as best evidence of actual job duties
- Assuming jobs remain unchanged over time
- Assuming a position is properly classified because “every other employer” classifies the position as exempt
- Neglecting to communicate and train managers as classification changes occur.
Our HR consultants are also prepared to assist you with:
- Your responsibility as an Employer and the steps you will need to take leading up to the December 1st effective date
- Crafting an Effective Communication Plan that addresses employee concerns and reactions to the changes
- Training managers/supervisors on the important role they play
CCI Consulting is ready to help you ensure compliance with current regulations and prepare for the updated FLSA requirements that take effect on December 1, 2016.
