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FLSA – Understanding the New Overtime Regulations Insert Your Logo Here
FLSA – Understanding the
New Overtime Regulations
Insert Your
Logo Here
Sarah Conroy, SHRM-SCP,
SPHR, CEBS
HR Business Consultant
CliftonLarsonAllen
Disclaimers
The information contained herein is general in nature and is not
intended, and should not be construed, as legal, accounting, or tax
advice or opinion provided by CliftonLarsonAllen LLP to the user. The
user also is cautioned that this material may not be applicable to, or
suitable for, the user’s specific circumstances or needs, and may
require consideration of non-tax and other tax factors if any action is to
be contemplated. The user should contact his or her CliftonLarsonAllen
LLP or other tax professional prior to taking any action based upon this
information. CliftonLarsonAllen LLP assumes no obligation to inform
the user of any changes in tax laws or other factors that could affect the
information contained herein.
Agenda
• Overview of Fair Labor Standards Act
(FLSA)
– History of Act and its impact
– Review of major components of the Act
– Review of the exemption categories
(with examples of positions for CU
industry)
Agenda
• New regulations and impact on business
– What’s Changing and what’s not?
– Where to Begin?
• Workforce Planning – do you have the right
complement of staff for the work of today and
beyond?
• Budget Cycles
• Q & A
After this session you’ll….. • Have a contextual understanding of FLSA, the
history of the act and its major components
• Know the exemption categories and how they
relate to your workforce
• Understand what's changing and what's
remaining the same
• Be able to navigate the job changes which may
result for your employees
After this session you’ll…..
• Learn how to create a roadmap to implement the
necessary changes into your compliance
landscape
• Know how to help managers and employees
know the law and the business case for any
changes to make the transition as smooth as
possible.
Polling Question
Has your credit union started
a workforce review yet?
Yes
No
FLSA History
• Taft creates US Dept of Labor in 1913
• Secretary Doak creates 5 day
workweek in the early 1930s
• Secretary Perkins (1933-45):
– Creates social security and much of
FLSA including minimum wage,
maximum hours laws.
– Creates unemployment insurance and
child labor laws.
FLSA Establishes
Minimum Wage
Overtime Payment – time and ½ in excess of 40
hour in a workweek
Recordkeeping & Posting Requirements
Child Labor Standards
FLSA Minimum Wage
Minimum Wage – Federal $7.25 per hour
Regular Rate of pay includes: wages,
commission, some bonuses, tips, room & board
Illegal Deductions: reduces earning below
minimum wage, for primary benefit of employer
FLSA Overtime Pay
• Overtime Pay – non-exempt employees must
receive one and one-half times regular rate of
pay for all hours worked over 40 in a workweek
• A workweek is 7 consecutive 24 hour periods or
168 hours
• In general Comp Time is illegal for all but
government agencies.
• Rules include piece rate pay,80 and 80
calculations and other industry-specific
compensation practices beyond scope today
FLSA Tests
• To qualify for exemptions 3 Tests must be
confirmed:
Salary Level
Salary Basis
Job Duties
FLSA Exemptions
Executive Employees
Administrative Employees
Professional Employees
Outside Sales Employees
Computer Employees
FLSA Recordkeeping
• Recordkeeping Requirements:
Accurate record of hours worked
Payroll records for 3 years and
wage computations for 2 years
Posting requirements
New Regs Effective
Final Ruling on Overtime
Regulations • Increase salary levels for the standard
“White Collar” Exemptions from
$23,660/$455 to $47,476/$913
• Increase the Highly Compensated
Employee Exemption from $100,000 to
$134,004 per year
• System to automatically update salary
threshold every three years
Non Discretionary
Bonuses/Incentive Pay
• Employers permitted to allow non- discretionary
bonuses to satisfy up to 10% of salary
requirement ($822 per week)
• Forms of compensation promised to employee
as part of compensation package i.e.)
commissions, production bonuses
• Must be paid at least quarterly
Polling Question
Will your credit union be
including nondiscretionary
bonuses to come into
compliance for 12/1?
Yes
No
What Has Not Changed
• The Duties Test
• Timekeeping Requirements
• Regulations governing part time employment
• Jobs Not Subject to Salary Level Testing
• Other exemptions, eg – farm work, retail
commissioned sales still not covered
• Don’t forget State Law!
DOL Projected Impact of
Regulations
• 4.2 million currently exempt employees will
immediately switch to nonexempt
• $1.2 billion a year will be paid to employee in
either OT compensation or increased wages to
meet salary threshold
• More income for working Americans
• DOL believes the new salary standard is more
appropriate level setting it above the poverty
level for a family of four
Other Areas of Impact
• Businesses will incur additional cost to
associated with coming into compliance
– Time spent
– Payroll system changes
– Communication material
– Training costs
Occupations Most Affected by
Proposed Changes
• Retail Store Managers/Assistant
Managers
• Support/Administrative functions
• Technology Industry - entry level
• Accountants & Auditors
• Office Mangers
• First line supervisors
• Hospitality Industry
• Part time employees
Where to Begin?
Jobs Impacted in CU Community • Due to the variation in asset size many positions could
be affected
• Executive Director/C level
• Customer Facing positions such as
– “Super Tellers”
– Supervisors
– Branch and Other Managers with Saturday hours
– Loan officers (Don’t forget the 2010 ruling making
most loan officers nonexempt.)
Jobs Impacted in CU Community
Support functions such as
• Accounting
• Finance
• Marketing
• HR
Where to Next?
Choices
• Several options for responding to the updated
standard salary level, including:
– increase the salary of an employee who meets the
duties test to retain exempt status;
– pay an overtime premium of one and a half times the
employee's regular rate of pay for any overtime hours
worked;
Choices
– reduce or eliminate overtime hours;
– reduce the amount of pay allocated to base
salary, adding pay to account for overtime for
hours worked over 40, holding pay constant,
or
– use some combination of these responses.
Preparing for Overtime Regulation
Changes
Review of Current Exempt Positions
Ensure Job Duties Meet Exempt
Requirements
Analyze Labor Cost Implications
Review Benefit Variations
Preparing for Proposed Overtime
Regulation
Consider Affects of Changes on
Morale and Turnover
Develop Communication Plan
Review Timekeeping Process & Policies
Require ALL Employees to Track Actual
Hours
Consider Impact to Admin Costs
Best Practices
Best Practices
• Begin with establishing work teams if you have not
already to include budget managers, HR and executives.
• Conduct workforce analysis to determine the required
positions at your CU and how they might be combined
based on need and worker skill sets or whether you
prefer to instead make those below threshold
nonexempt.
• Budgets must be overhauled to accommodate, but
budgets should not drive this process for anything but
the very short term.
• Remember to allay the concerns of your employees
above all else. They are your greatest assets.
Best Practices
• Establish & train on time/recording system
• Create well defined work week, pay cycles
and policies
• Require ALL employees to complete a
timesheet and acknowledge accuracy. FLSA and ACA both require hours-worked tracking.
• Develop job descriptions and review
annually
Best Practices
• Remember to consider the position and
the person’s status when determining
exemption
• Create an approval process for overtime
• Limit working from home for non-exempt
employees
• Implement controls to prevent “off the
clock” work
Polling Question
Has your credit union
reconsidered requisitions
already in the pipeline?
Yes
No
Claims and Lawsuits
Claims and Lawsuits
Why are wage and hour claims so popular? Lawsuits are
called “collection action”
• Wage and hour lawsuits are the fastest growing category
of employment litigation, they are attractive to attorneys
• Employers burden of proof
• Misclassification of positions are common
• Employee are permitted to work “off the clock” with out
compensation
• New regulations will increase the claims
For More Information
Visit the Department of Labor’s FLSA
Reference Guide
https://www.dol.gov/whd/regs/compliance/hr
g.htm
For State specific information check out
HR411 at:
https://www.dol.gov/whd/state/state.htm
Contact CliftonLarsonAllen
Any Questions?
Insert Your
Logo Here
Thank you!
Sarah Conroy, SHRM-SCP, SPHR, CEBS
HR Business Consultant
CliftonLarsonAllen
