Out With the Old, (Almost) In With the New
As 2016 continues into the holiday season, millions of American employers and workers are teetering in a state of limbo resulting from a Federal injunction that temporarily halted the new FLSA overtime rules. Claiming that the DOL raised the salary threshold too high, at least 21 states filed an emergency motion to halt the new rules. As previously discussed in our November Blog, “Time Is Money”, the new overtime rules scheduled to take effect on Dec. 1, 2016 would have raised FLSA salary threshold from $23,660 to $47,476 annually for employees to be eligible for overtime.
Now what? Although the preliminary injunction is not permanent, it does serve to sustain the existing overtime rules until the court has a chance to review the objections. Small, independent businesses and non-profit organizations see the injunction as a victory that will allow more time to consider the negative impact and difficulties of implementing the new rules. Many small employers argue that a new overtime threshold cannot be based on salary alone and that the new salary requirements will be difficult, if not impossible, for them to immediately implement. With the new threshold almost doubled from what it has been with rules set in place since 2004, smaller operations are concerned about keeping their doors open and are asking for a tiered, multi-year plan to becoming compliant.
Some argue that employers, both small and large, have known since May 2016 that this ruling was approved and have had plenty of time to prepare. To be ready, several steps should have already taken place such as identifying and reclassifying employees, raising worker’s salaries above the income threshold, determining how many hours they are actually working, and re-evaluating work policies on timekeeping and overtime along with communicating these changes to affected employees. When all is said and done, the upside for employers complying with the new rules is the opportunity reclassify employees who have long been misclassified as exempt and ineligible for overtime and time tracking.
Although it may be easier for some organization to only focus on the financial impact of expanded overtime pay, the bigger, long-term advantage may be the resulting employee morale and retention. Despite salary being the primary focus of the proposed overtime ruling, both employers and employees may benefit from a total rewards overhaul that includes flexible working arrangements, recognition initiatives, and reevaluating the benefit mix to maximize employee satisfaction and engagement to maintain a competitive advantage.
As the year comes to a close, only time will tell how the final ruling will look after the court reviews injunctions and appeals in the coming months. With the new administration set to take over the Department of Labor in January, the new rules could be further delayed, changed, implemented, or sent back to the drawing. Until then, as we look back on our year in review, between W-2’s, brackets, baskets, tax day, independence day, school daze, tailgates, and trick or treaters, nothing less than a Happy New for You would be any sweeter.
Happy New Year from Randolph Business Resources, LLC! See you next year!
By Susan Amsler
December 14, 2016
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