Listen up Employers, Managers and Supervisors!
The Department of Labor’s Solicitor of Labor, Patricia Smith, confirmed the release and implementation plans for the much anticipated White Collar Overtime Exemption Final Rule during her speech at the American Bar Association’s mid-winter meeting of the Federal Labor Standards Legislation Committee. This is truly BREAKING NEWS that all employers must pay attention to and prepare for now!
Salvador Simao, head of FordHarrison’s Wage and Hour Practice Group, and attorney David Kim published the article below on February 17th, 2016:
“During today’s session of the 2016 American Bar Association’s (ABA) Midwinter Meeting of the Federal Labor Standards Legislation Committee, the U.S. Department of Labor (DOL) Solicitor of Labor M. Patricia Smith announced that the DOL’s Final Rule regarding the Fair Labor Standards Act (FLSA) White Collar Exemption Regulations will be published in July 2016, with an effective date of 60 days later. This timeline is consistent with the DOL’s semi-annual regulatory agenda released late last year, which also proposed a July 2016 Final Rule timetable.
… Solicitor Smith’s comments today appear to confirm that the Final Rule will be issued in July 2016, and not “late July” as some publications suggested.
This is of course no surprise as this initiative is amongst the administration’s highest priorities. In 2004, the last amendment to the White Collar Exemption Regulations, the DOL provided 90 days for comments and the Final Rule became effective 120 days after publication. This time around, the DOL provided 60 days for comments, refused requests to extend the deadline, and has now stated that it is anticipated to be effective only 60 days after publication.
Just last week, on February 9, 2016, over 100 members of the US House of Representatives signed a letter written to Secretary of Labor Thomas E. Perez expressing concern with the proposed rules, particularly their ambiguity as to any proposed changes to the duties requirements, and requested that the DOL “reconsider moving forward with this rule as drafted.” There was no mention of any possible Congressional Review Act challenge to the Final Rule, though this is certainly an avenue that Congress may attempt to utilize if it is dissatisfied with the Final Rule.
Regardless of any such challenge, the Final Rule is coming. Employers must prepare themselves as the Final Rule will undoubtedly result in a substantial increase in non-exempt workers, wage and hour litigation, and compliance related issues.”
So, what is the bottom line?
PREPARE. The Final Rule is coming out of the DOL in early to mid-July. Even if a challenge is made, the objection to the Rule is NOT changing the exemptions, but possibly more along the order of increasing the level of detail in the Rule in order to tighten up compliance even more than proposed. One way or another, the DOL will see to it that the wage base is increased and workers who are currently misclassified will be switched to the non-exempt classification OR employers will pay a very high price.
As a matter of fact, the DOL is so certain of the future audits and lawsuits that an additional 12 Billion dollars has been proposed for the 2017 budget to train and hire more auditors and investigators. Employers are expected to spend a few billion dollars over the next year in wages and even solutions to litigation issues which are going to arise out of this Rule.
So, what’s an employer to do?
- Perform an internal audit of all overtime-exempt positions in your organization.
- Flip workers who are improperly classified to the non-exempt status ASAP.
- Make some serious decisions regarding how to compensate all workers fairly, especially those who end up flipped to non-exempt.
- Put in place a worker classification determination process to be used going forward.
- Tidy up job descriptions to be certain the actual duties performed are reflected accurately.
- Develop job descriptions for all positions missing them – especially for the overtime exempt positions.
- Institute performance review at least annually and include a review of the job descriptions of all exempt positions.
Where do I begin?
Good question. Jumping into this crucial compliance issue may seem daunting, especially given the magnitude of impact which may result. Re-inventing the wheel is going to be time consuming, which will become costly in many areas. You will save a lot of time and expense by short-cutting the process and purchasing tools that are made for this particular compliance issue. Visit BeAuditSecure.com and sign up to receive our Compliance Warrior Newsletter.
On March 1st, 2016, we will be releasing a tool-kit containing a “Done-for-You” process among other time-saving tools you will need to carry out all of the tasks on the to-do list above and then some. Our tool-kit will be comprehensive and contain exactly you need to Be Audit-Secure come September, when the Final Rule goes active. Our tool-kit will be announced in our Compliance Warrior Newsletter, first at a discounted price before being released to the general public.
Stay tuned and get ready for one of the most exciting and potentially costly compliance tasks we have ever had.
Until Next Time, Be Audit-Secure!
Lisa Smith
