On May 18, 2016, the Department of Labor announced changes to the Fair Labor Standards Act (FLSA) updating the salary and compensation levels for the white collar overtime exemptions. One of the new rule changes sets the salary threshold for exempt salaried workers at $913 per week, or $47,476 annually (up from $455 per week or $23,660 annually). The impact on HEC member organizations and their efforts to comply with these changes are summarized in this article.
Affected Employees
The number of employees impacted by the new FLSA rules ranged from 1 - 300+ employees for HEC participating organizations.
43% of participating organizations have an understanding of affected employees working more than 40 hours per week, with 57% of the organizations unsure if the affected employees are working more than 40 hours per week.
Type of Jobs Impacted
Participants were asked what job types were impacted. The summary of the type of jobs being affected within organizations are noted below, with the Administrative job type being affected most significantly. For 35.7% of participating organizations, administrative type jobs have been impacted by the FLSA changes.
Strategic Planning
Despite all the changes that may be occurring, majority of organizations (67%) do not plan on making any changes to benefit programs and 26% of organizations are unsure, with 7% initiating changes.
In addition, majority of organizations (64%) do not plan on making any changes to reduce or eliminate bonus/incentive eligibility to offset costs, 29% of organizations are unsure, with 7% making changes.
Actions which participating organizations plan to initiate to respond to the change in FLSA rules include:
- 53.0% will adjust salary levels to the new threshold ($47,476 per year) to maintain FLSA exempt status
- 32.5% plan to reclassify affected jobs to salaried non-exempt status
- 40.2% plan to reclassify affected jobs to hourly status
- 8.1% may consider using fixed salary fluctuating workweeks
- 32.9% plan to modify job duties and assignments
- 51.3% will consider restricting overtime
Communication of Changes
The majority of participating organizations (67%) reported they will provide communication to affected employees only, with 23% of organizations communicating to all employees.
55% of organizations have begun their communication process. 34% of organizations plan to begin communication plans during the months of September and October, with the remainder beginning in November.
Methods of Communication
84% of the participating organizations will provide some type of communication to employees.
- 38.5% Individual Meetings
- 15.4% Department Meetings
- 15.4% Formal Written Communication
- 14.1% Email Communication
- 10.3% Company-wide Meetings
- 5.1% Company Intranet
- 1.3% Newsletter
