The DOL Proposes Changes to Ensure That Employees are Paid for Every Hour Worked
The Federal Labor Standards Act requires that an employee receive overtime pay for every hour worked over 40 hours per week. Overtime pay is usually calculated as one and one half the hourly rate. However, the FLSA has put many exemptions in place that can cause certain employees to work 50 to 60 hours a week without making overtime. For this reason the DOL has suggested extended overtime protections to the FLSA.
The “White Collar Exemption”
In order to be considered under white collar exemptions, an employee must meet minimum tests related to their job duties and be paid on a salary basis. The minimum required salary for exempt workers is $23,660 a year or $455 dollars per week. The Department of Labor is proposing that the minimum required salary be changed to $47,892 a year or $970 dollars per week1.
Along with a higher salary level the DOL has proposed putting a schedule in place that will automatically update salary and compensation levels based on changes in the economy. Thus preventing the lengthy processing time between rulemaking.
Highly Compensated Employees
The DOL trusts that the Highly Compensated Employee (HCE) test is a suitable determination of whether or not highly compensated employees qualify as executive, administrative or professional employees. As of 2004, an annual income of $100,000 a year was classified as high compensation, which set high compensation four times higher than the required standard salary. With changes being made to the standard salary required, the Department of Labor has proposed that the annual income defining a highly compensated employee be changed from $100,000 to $122,148 per year1.
Nondiscretionary Bonuses
The Department of Labor has begun to consider whether or not nondiscretionary bonuses should be used to help meet the salary requirement. As it stands, these bonuses are only counted in the total annual compensation, however many employers have urged that these bonuses be included more broadly. For retail and restaurant industries, nondiscretionary bonus can make up a significant portion of an employee’s salary. Including these bonuses can make a huge difference to employers in these industries.
EPAY Systems Can Assist You in Preventing Unpaid Overtime Lawsuits
EPAY’s cloud based time and attendance system, Blueforce, helps you track and monitor your compliance, accurately calculate work time and complex pay rules and puts tight controls on time changes. Managers can even chose to be notified in real time when an employee approaches or reaches overtime.
Learn more about how EPAY’s Blueforce system can help you address how to prevent unpaid overtime lawsuits.
Resources
http://www.gpo.gov/fdsys/pkg/FR-2015-07-06/pdf/2015-15464.pdf