Changing Overtime Exemption Could Cause Big Problems for Management

The United States Department of Labor has announced a proposal to amend the white-collar overtime exemption for executive, administrative, and professional employees to increase the salary threshold necessary to qualify for the exemption. Under the proposed rule, in 2016 the salary necessary to qualify for the exemption at the federal level would be $970 per week, and not less than $50,440 per year. This is in stark contrast with the current annual requirement of $23,660.

Importantly, to qualify for the exemptions, employees must also meet the job duties tests for the executive, administrative, professional (or other limited exceptions) which are also under review, and also potentially subject to changes by the end of the year. In the mean time, we can assume that the salary threshold for meeting the exemption will go up, which could have an extreme impact on some businesses and classes of employees.

Line Managers Suddenly May Require Overtime Payments

In one of the most devastating examples of how the new regulations may impact businesses, we examine the fast food industry. Currently there are shift managers who direct other employees and perform management duties but make low annual salaries. Presently, those employees are not necessarily required to receive overtime under the present salary threshold. However, when the regulations are amended those managers likely now will be required to receive time and a half payment for hours worked in excess of 40 and businesses will have the nightmare of accounting for which hours are spent performing management versus regular work.

Regular Wage and Hour Training Necessary for Upper Management

With the rapid changes in wage and hour regulations comes the need for strategic decisions on how to compensate employees who may now be subject to overtime payments. Thankfully, we are well prepared on the changes and ready to train your upper managers on the nuances of the new regulations, and how they may impact your employees and classes of managers. By scheduling training, your company can avoid the massive pitfalls and penalties brought on by violating the federal (and state) wage and hour laws.

Syntrio’s cost-effective wage and hour training courses are designed with the decision-making management employee in mind. Therefore, the examples used within are real-life scenarios that are easy to comprehend, even when the user does not have a technical background in wage and hour law. Given the immense changes taking place in this area of the law combined with the extreme risk of class-action litigation, we feel that wage and hour training is essential to the modern business.

Syntrio is committed to reducing the number of wage and hour lawsuits filed in state and federal courts by facilitating compliance with state and federal laws and commitment to the utmost ethical standards in wage payment. Contact Syntrio for more information and remember to follow us on TwitterGoogle Plus and LinkedIn for daily updates on employment law and compliance issues that may impact your business!