Get Ready – Exempt Status Changes Coming This Summer
Back in August of last year, we posted an HR Base Camp blog about the Department of Labor’s proposal to change the regulations by which some employees may be considered exempt from overtime. In response to a directive from President Obama in 2013, the DOL proposed significant adjustments to the requirements of the Fair Labor Standards Act (FLSA) that will affect all private employers. Now the review process is almost over, and the DOL is about to publish its final overtime regulations in the Federal Register, which means the new regulations will be effective within 60 days of the date they are published. By July-ish, then, we all need to be ready.
The biggest change is likely to be an increase in the standard salary threshold for exempt status, to at or near the 40th percentile of weekly earnings for full-time salaried workers—about $970 a week, or $50,440 a year, in 2016. This is nearly double the current threshold of $455 per week!
In response to a year of public outcry from employers, the final exempt salary threshold may be slightly lower than the $50K proposed, if recent news reports are to be believed—but probably not by much. The new rules may also include changes to the duties required for exempt status.
What does this mean for you?
In ENGLISH, this means anyone in your office currently classified as salaried exempt (i.e., not entitled to overtime) will have to be reassessed to confirm they meet the salary threshold for continued exemption. The typical medical or dental office may have exempt salaried office managers, team leaders, and professionals, such as doctors and nurse practitioners. Nurses and hygienists should almost never be treated as exempt, even under the current rules.
The main issue will be with your management teams, who will now need to meet the new minimum annual salary to be exempt from overtime. That will leave employers with a choice of whether to increase salaries, reclassify a formerly exempt employee to non-exempt and pay overtime to these employees as needed, or hire additional workers to avoid the need for overtime – all costly alternatives. Also, remember that employees can’t agree to waive overtime, or agree to a lower salary. Employees cannot legally waive their rights under this law.
If you would like a confidential analysis of the classification of positions in your office, whether you are a member or not, doctors and office managers should call CEDR Solutions at 866-414-6056. We can help. You are also free to use our Exempt Classification Guide (for CA, click here instead) to help you prepare for the changes to come.
Either way, we will continue to keep you updated as we learn more