The DOL s Final White-Collar Exemption Regulations Presented for CEDIA Members October 13, 2016 Tami A. Earnhart ICE MILLER LLP tami.earnhart@ (317) 236-2235 Ice Miller LLP 2016. This presentation is not legal advice. You should seek advice from legal counsel about any specific, factual situations, particularly given the fact-sensitive nature of these issues and the ongoing challenges to these regulations.
Are you (or your employees) covered by the FLSA? Enterprise coverage Gross Income of $500,000 or more per year Enterprise ordinary commercial activities that result in sales made or business transacted that meets the income threshold (i.e., operating a business ) Individual Coverage Engages in interstate commerce (e.g., making out-of-state phone calls; mailing information or conducting business over state lines via the U. S. mail; ordering or receiving goods from an out-of-state supplier; handling credit card transactions; or performing the accounting or bookkeeping for such activities) More than an insubstantial amount of time
SALARY EXEMPT
What do the final regulations change and when? Effective December 1, 2016 Changes the salary level, i.e., amount required for the white-collar exemptions White-collar exemptions affected are the following: Executive Administrative Professional Computer Related
What do the final regulations change? (cont'd.) Salary required is $913 week (current salary level is $455), or $47,476 per year Subject to adjustment every three years beginning January 1, 2020 with 150 days notice Computer related professionals can still be paid hourly - $27.63
What do the final regulations change? (cont'd.) Non-discretionary Paid at least quarterly Maximum = 10% of annual salary requirement Catch-up" payments at end of quarter
What do the final regulations change? (cont'd.) Highly-compensated employees Salary + compensation = $134,004 (up from $100,000) Subject to adjustment every three years Must still get weekly minimum required salary (w/o bonuses or other comp)
How will the adjustment be calculated? Fixed percentile - 40th percentile of all full-time salaried workers in the lowest-wage Census Region, currently the South (based upon data from the Bureau of Labor Statistics) Highly-compensated employee level at 90th percentile of all full-time salaried workers in US
What don t the final regulations change? White-collar duties tests Other exemptions, e.g., Outside sales employees Section 7(i) Retail and Service Motor carrier exemption Teachers, Lawyers, Doctors Sugar beet processors (there really IS an exemption), etc.
What should you do first? Evaluate exempt positions to determine who falls below $47,476 per year ($913 per week) Remember salary exempt. Can be salaried, non-exempt if duties test not met Consider whether those employees may fall under an exemption not affected by the changes Gather data on hours worked by employees, which will help in considering best option going forward
What options do you have? Raise salary over the minimum Change to hourly compensation plus overtime Limit overtime Divide work between 2 positions Pay salary, plus overtime
Some Methods for Paying Salary Plus Overtime Divide weekly salary (plus any additional comp) by 40 pay 1½ times resulting rate If salary covers set # of hours above 40 Pay ½ time for hours between 40 and the set # 1½ time for hours about set # Fluctuating Workweek
How does the Fluctuating Workweek method work? Work must fluctuate from week to week (due to nature of work, not choice) Must have understanding that the fixed salary covers whatever hours are worked (not typical deductions) Salary must equal at least minimum wage if divided by hours worked in any given week Overtime rate = no less than one-half regular rate of pay Regular rate = salary/number of hours worked in workweek
Potential Trouble Spots Communicating the change to employees Managing the need for previously exempt employees to track time Modifying pay stubs Handling unauthorized or off-the-clock work
Potential Trouble Spots (cont'd.) Recording and paying for travel time Spotting and addressing employees using smartphone/emails after hours Responding to requests for "back" overtime
Challenges to the Change Protecting Workplace Advancement and Opportunity Act (S.2707/H.R.4773) March 17 Overtime Reform and Enhancement Act (H.R. 5813) July 14 H.R. 6094, the Regulatory Relief for Small Businesses, Schools and Nonprofits Act Passed House 9/28 Lawsuits
DOL Resources Available https://www.dol.gov/whd/overtime/final2016/ Fact Sheet and Guidance Private employers generally Small business Charts Etc.
DO NOT FORGET STATE LAWS!