On Thursday, March 13, 2014, President Obama signed a Memorandum directing the Secretary of Labor to update the regulations that dictate “white collar” overtime exemption rules to (as stated by the President) “make overtime exemption rules easier for employers to understand.” These new easy-to-understand set of rules (that took the Department of Labor well past the original deadline of November 2014 to draft) were finally sent to the Office of Management and Budget (OMB) for consideration on May 5, 2015.
Even though the new changes will likely cause some form of acid-reflux for employers, the current rules can be difficult to understand and the requisite salary level of $455 per week is low by today’s standards.
Under the current rules, employees must meet stringent criteria to qualify for exempt-level status. Most of the positions are required to receive a minimum salary of $455 per week and carry several specific primary duties. Administrative professionals, for example, must perform non-manual office work that is related to management or general business operations of the employer or employer’s customers (as their primary duty), AND must exercise of independent judgment and discretion about matters of significance as a primary component of the position. In other words, if your receptionist or secretary is a salaried-exempt employee, you are likely already in violation of the law.
The Department of Labor (DOL) chose to focus on two main areas for their revisions: modifying primary duties requirements (such as nonexempt duties having to be less than 40 to 50 percent for a worker to still be classified as exempt) and raising the minimum salary levels to $42,000 to $61,000, annually.
As with most new government regulations, employers should be ready to feel immediate consequences should they choose to ignore the ruling which is scheduled to be finalized in about eight weeks. As it stands now, wage and hour claims are already the fastest growing area of class litigation today.
Employers found guilty of mis-classifying employees as exempt from overtime could be required to pay employees back wages for up to two years of overtime (three if the employer is found guilty of willfully violating the statutes); employees may also be awarded an equal amount as liquidated damages. Furthermore, employers can expect to pay additional penalties of up to $1,100 for each violation.
Finally, I cannot stress enough that titles have little to do with determining whether or not an individual qualifies to be exempt from overtime. An individual can have a management title but still not be permitted to be a salaried exempt employee.
What to do Next…
For employers still trying to unravel and recover from the mysteries surrounding penalties and financial requirements for the Affordable Care Act, this is not good news. But we will NEVER present you with a challenge without having a solution. Ask Linda HR is ready to help you:
1. Conduct interviews with your salaried exempt level positions and review your job descriptions to ensure the positions can indeed be exempt from overtime
2. Ensure your employees understand his or her duties well enough that they can correctly answer the DOL’s questions should you become the subject of an audit or lawsuit
3. Review and make recommendations regarding your timekeeping procedures. REMEMBER: the DOL is likely to side with employees who assert he or she worked overtime and you are unable to prove otherwise
4. Review your clock-in/clock-out policies in your current employee handbook to include strategies to effectively deal with violations of your policy
Job descriptions are difficult, tedious and usually the most dreaded business task; giving this over to a professional can save you time, money, and certainly, ulcers and once this final rule is announced, it is very likely that employees will seek some type of relief for their individual situation.
Ask Linda HR Consulting Services is here to help! Contact Linda at 210.846.4900 for your free assessment.