by Lee P. Geiger, Esq. Partner at Graydon Head
Earlier this year, the Department of Labor (“DOL”) issued new regulations that will dramatically change the way employers pay their employees. The new regulations take effect on December 1, 2016, and will have a significant impact on non-profit agencies. Is your agency ready for the change?
The new regulations more than double the minimum level for “exempt” workers from $23,660 per year to $47,476 per year. That means that employees in the limbo pay range between $23,660 and $47,476 who were previously exempt from the DOL’s overtime rules will now be entitled to overtime pay for all hours worked over 40 in a workweek. The new regulations also include a mechanism for automatically updating and adjusting the exemption salary level every three years.
What Hasn’t Changed?
The exemption formula has not changed: “Salary + Duties = Exempt.” Under both the old and new regulations, employees must both be paid on a salary basis (at least $913 per week / $47,476 per year) and the employees’ duties must fall into one of the exemption categories in order to be properly categorized as exempt.
What Should My Agency Do Now?
Now is the time to conduct a FLSA audit of all employee classifications to determine: (1) whether the position satisfies the salary test under the new regulations (i.e., is the employee paid on a salary basis and does the job pay at least $913/week ($47,476 per year)); and (2) whether the position has the required duties to qualify for an exemption. If the position fails either the salary or duties test, the employer should develop a plan to properly classify the position as “non-exempt.”
What Happens If We Ignore The Rules?
In addition to owing substantial back pay to employees, employers who fail to comply with the rules may be subject to a DOL audit, penalties, attorney fees and (in the most egregious cases) criminal liability.
How Can I Learn More?
GC Nonprofit News and HR Elements are sponsoring a seminar on August 16, 2016 to educate non-profit agencies about their obligations under the new regulations. Lee Geiger, an attorney and partner at Graydon Head, will lead the seminar at Interact for Health, 3806 Edwards Road, Suite 500, Cincinnati, Ohio 45209. Registration is at 8:00 am. The program runs from 8:30-10:00. Space is limited. Please contact Crystal Ridge to register: CRidge@graydon.com or 513-629-2788.