A number of very significant changes are about to impact small business owners. The Department of Labor (DOL) is proposing a major change in "White Collar Exemptions" to the Fair Labor Standards Act (FLSA). These changes are expected to come into play much earlier than previously anticipated, and may be enacted as early as May 16, 2016 – well ahead of previous estimates of June or even later in the summer of 2016.
DOL is specifically proposing a significant increase in salary in order to qualify for white collar exemptions. Employees who meet specific criteria are exempt from federal laws governing overtime pay and minimum wage requirements. These employees must be executive, administrative, professional, or computer employees falling into the current salary threshold stated by DOL – currently $455 per week. If the changes are approved, employers would have to ensure that exempt employees' salaries are at least $921 per week, in order for them to remain exempt. Further, exempt highly-compensated employees would see salaries rise from $100,000 per year to $122,148 per year to remain qualified for the highly-compensated exemption category.
The rush for DOL to implement the new policy changes is in part due to political considerations. The Congressional Review Act allows Congress up to 60 days to disapprove any major policy changes which have been implemented. In short, if DOL cannot pass these new, significant regulations prior to May 16th, the policy changes will be subject to the scrutiny of the next president and Congress. The current administration is likely to give the go ahead to these proposed changes; however, it is difficult to predict the viability of the changes under the next administration.
Businesses should be aware of these proposed changes, and take action to prepare themselves accordingly. These new rules are expected to impact service-based businesses the most; however all businesses should review their processes and policies to ensure compliance with these changing regulations. Misclassification of employees is a common source of employer liability under the FLSA and a high-priority enforcement area for DOL – emphasizing the crucial importance of taking time to understand federal regulations affecting employee pay. Due to the complexity and changing nature of Federal, State, and Local employment rules, consulting a legal professional can lead to piece of mind in tackling future business endeavors, while minimizing the worry over potential liability. Contact Boreale Law for a business compliance check-up today!