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White-collar OT rule could double salary basis

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in Human Resources,Overtime Labor Laws

When Department of Labor Wage and Hour Division Administrator David Weil keynoted a gathering of top HR pros on March 24, his official comments carefully avoided the much-delayed, anxiously awaited rewrite of the federal rules governing white-collar overtime pay.

Weil’s silence didn’t keep other experts from weighing in on the new rules—probably ready in May or June—that affect which managerial employees are eligible for overtime. The Fair Labor Standards Act’s executive, administrative and professional exemptions were the hot topic at the Society for Human Resource Management (SHRM) Employment Law & Legislative Conference in Washington, D.C. The consensus:

The salary basis of the Fair Labor Standards Act (FLSA) could more than double. The cutoff beyond which many white-collar workers are no longer eligible for overtime will be substantially higher than the current $455 per week ($23,660 per year).

The duties test—which until now has ruled out overtime pay for employees who perform even one of the exempt duties of an executive, administrative or professional employee—will soon become much more employee-friendly. One scenario reportedly under consideration: requiring overtime pay unless managers spend at least half their workweek doing managerial tasks.

Employment law attorney Tammy D. McCutchen, who ran the Wage and Hour Division when the white-collar overtime rules were last rewritten in 2004, noted that some employee advocates have been pushing for a salary basis as high as $69,000 per year.

McCutchen said that’s just not realistic: “The rule shouldn’t be written for New York and San Francisco. It has to work everywhere, in every state and every industry.” She predicted the salary basis “will be somewhere between $40,000 and $50,000.”

On the duties test, McCutchen believes the DOL will adopt the standard California uses to determine if an employee is really a manager: Does he or she spend more than 50% of work time performing exempt activities? If that happens, McCutchen said, “There will not be a fast-food assistant manager anywhere who is exempt.”

McCutchen believes the new rule—which will most directly affect retail and hospitality managers—could scrap the executive concurrent duties exemption, which covers cases in which a restaurant manager might be expected to both direct operations and also run a cash register during busy times.

Nancy Hammer, SHRM’s lead attorney for government affairs, urged employers to start planning now for the rule’s upcoming release. “It is not too soon to begin a review of your employee classifications and job descriptions,” she said. Your goal: Determine how your pay systems will be affected if many exempt employees suddenly become nonexempt.

Timing note: If the new rule is released by June, expect it to go into effect in August 2016.

{ 1 comment… read it below or add one }

Lafreda April 9, 2015 at 10:54 am

Another article on classification

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