Tag Archives: wage and hour

DOL Announces Voluntary Payroll Audit Program

On March 6th the Wage and Hour Division (WHD) of the U.S. Department of Labor announced a new pilot program called the Payroll Audit Independent Determination  ( PAID) Program.  According to the DOL PAID is designed to expedite the resolution of “inadvertent overtime and minimum wage violations under the Fair Labor Standards Act “(FLSA).

Participation in PAID is voluntary.  If an employer chooses to participate in the program and FLSA violations are discovered the WHD will not impose penalties or liquidated damages as part of any settlement.  Instead, the employer will only pay the backpay owed to the employee or employees.

Employers may not participate in the program if they are in litigation (presumably involving the FLSA but the press release does not specify) or currently under investigation by the WHD for the wage and hour practices at issue.  Participation in PAID also requires employers to review the WHD’s compliance assistance materials, carefully audit their pay practices and agree to correct the pay practices at issue going forward.

WHD will implement PAID nationwide for approximately six months and will then evaluate the program and consider future options.  More information about PAID is available at http://www.dol.gov/whd/paid

For employers who believe they may have “inadvertent” violations of the FLSA participation in PAID may be a good option.  But before you agree to invite the WHD into your place of business I recommend that you conduct your own audit of your compensation practices to identify any potential violations or areas of concern.  We assist clients with self-audits frequently.   Remember, an ounce of prevention is worth a pound of cure!

 

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The New DOL Overtime Rules Are Here: What You Need to Know

After much anticipation ( and likely some dread from employers) the DOL released its new overtime rules last night.  The Final Rule makes changes to the salary test for the Executive, Administrative and Professional (EAP) Exemptions as well as the Highly Compensated Employee Exemption.

* Key Provisions of the Final Rule *

The Final Rule focuses primarily on updating the salary and compensation levels needed for EAP workers to be exempt. Specifically, the Final Rule:

  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South, which is $913 per week or $47,476 annually for a full-year worker;
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally, which is $134,004; and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.
  4.  Amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.  A “catch up” payment can also be made in an effort to satisfy the new salary level, provided it does not exceed 10 percent of the new minimum salary. However, HCE employees must still receive at least the full standard salary amount each pay period on a salary or fee basis without regard to the payment of nondiscretionary bonuses and incentive payments.
  5. The Effective Date is December 1, 2016.

Significantly, the Final Rule made no changes to the current duties tests for these exemptions.

Employers  have almost 6 months to prepare before these changes become law.  Use that time wisely to consult with employment law counsel, audit your employees currently classified as exempt and analyze your business to determine the best way to respond .

 

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Will the New Salary For The White Collar Exemptions Be Lower Than Expected?

Employers are anxiously awaiting the new DOL rules for the executive, administrative and professional  exemptions, which are also known as the “white collar exemptions”.  The proposed new rule would increase the annual salary for these exemptions to $50,440.  But rumors are circulating that the final rule will set the new annual salary at $47,000.  This would be almost exactly double the current salary threshold of $23,660 per year.

We should have the final rule later this month.  Stay tuned for further developments!

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Prepare For Upcoming FLSA Changes Now

Last month the Department of Labor announced that the final rule changing the Executive, Administrative and Professional Exemptions under the FLSA, the so called white collar exemptions, is expected to be released in July 2016. After the final rule is released the changes will likely become law 60 to 90 days later. The proposed changes will increase the annual minimum salary for these exemptions from $23,660 to $50,440. And, while there has been no announcement yet, it is still possible that the final rule will change the duties test for these exemptions which could greatly impact what employees qualify as exempt.

Now is the time for employers to begin planning on how to deal with these changes. Certainly, if there is a change to the duties test the change will likely be to narrow the exemption. Employers should conduct an analysis to determine whether it is more economically beneficial to increase the salary of some exempt employees, or reclassify them as nonexempt and pay them overtime. If the decision is made to continue to treat the employees as exempt employers should analyze whether any of that increase in salary can be passed on to their customers and if so, how much.

The analysis should also focus on the duties of every employee that is currently classified as exempt. If there is doubt about whether a particular employee is properly qualified as exempt the employer should determine whether that employee can be given additional duties and responsibilities to remove doubt about the exemption. If that is not possible the employer should consider how to best go about reclassifying the employee.

Reclassification may be viewed as an insult to some employees, so this must be considered in determining how to approach and resolve the issue. Also, employers must determine whether they will increase the pay of reclassified employees, in an effort to soften the blow of reclassification.

Proactive employers who conduct these analyses now will save themselves headaches in the future and be well positioned to comply with the new law as soon as it takes effect.

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