Personnel management software can help businesses during times of intense transition, especially when it's unclear whether certain changes will occur.
Potential amendments to overtime exemption
Last year, President Barack Obama issued a memorandum calling for a revision of the Fair Labor Standards Act. Obama appealed to the secretary of labor, stating the existing overtime regulations for white collar workers needed to be streamlined and changed to include more employees.
Since then, the U.S. Department of Labor has announced several different dates on which it planned to release the proposed regulation changes. First December 2014 and then February 2015 was supposed to be the date of issuance. Then, in March 2015, the Supreme Court ruled "a federal agency does not have to go through the formal rulemaking processes" when deciding to make amendments to current regulations. This means should the DOL decide to make significant alterations, it doesn't need to provide a period of time for the public to make comments.
However, it's now April, and there is no word on when employers can expect the definitive new regulations. That doesn't mean businesses should sit quietly and wait it out. There are actions employers can take to prepare themselves for any transition that may soon appear.
FLSA regulations today
Currently, the FLSA overtime regulations state any full-time worker who makes $455 per week, or $23,660 per year, or less can be considered exempt from receiving overtime pay for working more than 40 hours in one week. CNN Money stated employers classify these workers as exempt and make the choice to pay them salaries instead of an hourly wage. Today, only 12 percent of workers qualify for overtime.
Employees affected by this white collar exemption policy include managers, administrative professionals, sales workers, teachers and other professionals in careers that require advanced knowledge in science or the arts, according to the DOL website.
What regulations could look like tomorrow
President Obama's goal is to increase the baseline salary required for workers to be exempt from overtime pay. While regulators have proposed no exact increment, many speculate the DOL will mandate the amount is raised to somewhere between $42,000 and $52,000. This would make 3.5 million and 6.1 million more workers, respectively, eligible for overtime pay.
The Economic Policy Institute and the National Employment Law Project hope the threshold is increased even higher. Ideally, for these groups, the number would get bumped up to $51,168 per year. This would mean 47 percent of workers would be eligible for overtime pay.
How does this affect employers?
Even though no announcements have been made yet, employers cannot ignore this issue. After the Supreme Court decision in March, new guidelines could become reality at any time, and businesses need to be ready to accept the changes and transition.
One thing employers cannot do is forget about state laws. It's possible that the new stipulations could change the way employers reconcile differences between minimum wage guidelines in their states and the FLSA. Employers have to comply with both.
The Society for Human Resources Management stated employers should review current job descriptions to ensure duties, exemption status and responsibilities are clearly expressed to candidates. It also may take several months for the new guidelines to take effect. Should a business have to reclassify a large number of employees, companies may find themselves redefining certain roles or expectations. Preparing options now for potential changes later is a good idea.
Personnel management software can help businesses not only prepare for a future change but also handle it better when the announcement finally rolls in.