How to Comply with FLSA Overtime Rule Changes

Use this checklist to make sure your organization is compliant with the new rules

By Allen Smith, J.D. May 11, 2016
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The long-awaited new FLSA overtime rule changes have been released, and it's time for human resource professionals to make sure their organizations are fully compliant with the new requirements.

The changes make compliance more challenging for employers, but here is a checklist to make sure your company is on the right track:

1. Identify Affected Employees
The first step is to identify currently exempt employees with salaries that fall below the new salary threshold for exempt employees of [$970 per week, or $50,440 per year].

2. Devise a Plan of Action
Determine whether to have a zone within which employees close to the new threshold will get bumped up to maintain exempt status, or whether to reclassify as nonexempt all employees whose current salary is below the new minimum.

3. Assess Your New Situation
For employees who will be reclassified, figure out how many hours they are working per week so you can model pay going forward with reasonable accuracy.

4. Determine an Approach to Setting Nonexempt Pay Rates 
For example, determine whether newly nonexempt employees' hourly rates will simply be their current weekly salary divided by 40, or whether there will be an effort to replicate current pay and hours by lowering the hourly rates to account for the possibility of overtime compensation.

5. Review Your Time-Tracking Tech and Company Policies
Audit your time-tracking technology and policies to make sure you are accurately tracking employees' working hours. Be sure to set up training for employees who will now need to track their hours.

6. Evaluate Your Highly Compensated Employees
For employees who were subject to the highly compensated standard but now fall below the new pay level, [(between $100,000 and $122,148 per year)], determine whether those jobs satisfy the full duties test of one or more white-collar exemptions, as opposed to the relaxed duties standard applicable for highly compensated employees.

7. Prepare for the Long Term
Consider whether to reclassify other positions now to manage risk and enhance compliance.

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