Your State Association Presents New Overtime Exemption Regulations Program Materials Use this document to follow along with the webinar presentation. Please test your system before the broadcast. Please note there is a separate handout with supplementary materials. Be sure to print enough copies of each handout for all listeners. Wednesday, June 22, 2016 Presenter: Steven Greene Technical Support (for faster service please submit inquiries via email or online): (Registration & Tech Support): Email- support@conferenceedge.com, Phone- (877)988-7526 FOR ADDITIONAL ASSISTANCE PLEASE REFER TO OUR FAQs
New Overtime Exemption Regulations (SW2 1284) Bankers Association Briefing Wednesday, June 22, 2016 1:30 3:30 p.m. CDT
Key Changes Salary Test Current rule sets minimum Salary Level at $455 per week ($23,660 annually) Final rule sets Salary Level at $913 per week ($47,476 annually) 40 th percentile of full-time salaried employees in the Southern census area
Impacted Exemptions White Collar Salary Tests Executive Administrative Professional Computer Not Outside Sales no salary component
Key Changes Highly Compensated Employee Compensation Test Current rule sets required Annual Compensation Level at $100,000 annually Final rule sets required Annual Compensation Level at $134,004 90 th percentile of full-time salaried employees in United States
Timing December 1, 2016 effective date Legislative Activity Political Issues
Periodic Adjustments Salary and Compensation levels will be adjusted every three years New levels published in August (first in 2019) New levels effective January 1 (first January 1, 2020) 40 th percentile in lowest wage census region Salary 90 th percentile nationally for highly compensated exemption
Incentive Payment Credit Up to 10% of required salary level Nondiscretionary bonuses, incentives and commissions Payments must be delivered at least as frequently as a calendar quarter Annual credit up to $4,747.60 Make-up pay obligation
Implications New salary level will adversely impact 6.0 million exempt individuals 40% of impacted employees work in small entities Financial services industry has largest percentage of affected small entity employees
New Compliance Approach Salary Threshold Identify current exempt classified positions below $913 per week figure Consider salary adjustment to $913 Consider incentive plans offered to impacted individuals Evaluate roles which require periodic or regular overtime work Establish new hourly rates of pay adjusting for anticipated overtime work to maintain approximate current total compensation
New Compliance Approach Primary Duty Test Identify exempt classified positions paid between $47,476 and $134,004 (new highly compensated employee test) Confirm satisfaction of duties test (executive, administrative, professional, or computer) Update job description and documentation reflecting actual duties and responsibilities Confirm reliance on Outside Sales Exemption
New Compliance Approach Limit Hours Worked Can work demands be satisfactorily performed within 40 hours? Can organization implement overtime approval policy? Must be communicated Must be managed Cannot tolerate noncompliance Must be real Salaried Nonexempt Model
New Compliance Approach Alternative Pay Plan FWWPP FLSA contemplates alternative pay plans that may be worth considering Fluctuating Workweek Pay Plan for example Requires weekly salary no deductions of any work performed in week ( super salary ) Salary covers straight time compensation for all regular and overtime hours worked Overtime is computed at ½ the employee s effective hourly rate of pay (as compared to 1 ½ times) Effective hourly rate will vary each week as hours worked varies Adverse Employee Relations Risk
Mortgage Loan Officers Administrative Exemption 2010 Administrator s Interpretation Mortgage loan officers engaged in sales Mortgage loan officers produce loans Advice to Individuals is nonexempt work Cannot satisfy the Administrative Exemption primary duty test 2010 Department of Labor Interpretation
Consumer Lenders Administrative Exemption Who is a consumer lender How does DOL Interpretation apply Rationale
Commercial Lenders Administrative Exemption Who is a commercial lender How does DOL interpretation apply Rationale Mixed roles Primary Duty
Mortgage Loan Officer Outside Sales Exemption Selling Product or service door to door sales person Regularly away from bank location Regularly away from home offices 2006 DOL Opinion Letter
Mortgage Loan Officer Outside Sales Exemption Job Analysis Works from bank office Works from home Works from real estate office independent Work from community development office independent Is not solicitation by telephone, email, or fax
Nonexempt Employees Recordkeeping Accurate Record of all Hours Worked Off-the-clock litigation and investigations More high-level nonexempt employees Update time reporting policy Address travel time, training time, cell phone time, and community marketing public relations Employee verification Manager verification Training - Briefing
Communication Challenges Senior management briefing Manager issues (standards timekeeping) Employee morale issues (status) DOL change No bank changes in status DOL Explains December 1 change Measures to reduce adverse employee relations