Final Countdown to the New FLSA Regulations – Are You Ready

As a reminder, effective December 1, 2016, changes to the Fair Labor Standards Act (FLSA) regulations will dramatically impact many employers. We are working diligently to provide support to our clients in order to help ensure their compliance.

The New FLSA Regulations

The final regulations make the following changes:

• The new regulations impact employees exempt under the administrative, executive, professional (excluding doctors, lawyers and teachers) and computer related professional (if the employer is choosing to pay on a salary basis) exemptions.

• The new standard salary threshold for the impacted exemptions above is $47,476/year ($913/week).

• Similarly, there has been an increase in the highly compensated employee (HCE) exemption. The final rule increases the annual compensation level to $134,004/year.

• The DOL also established automatic increases every three years to the two salary thresholds, beginning January 1, 2020.

• Employers are allowed to use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the salary in the standard salary test. That is $91.30/week or $4,747.60/year.

The Path to Reducing Your Risk

You can take proactive steps to help ensure compliance with the new FLSA regulations.

Assess Exempt Status and Costs. We previously sent your company an email link and credentials to access our Navigator OT exemption analysis tool and OT Cost estimator.  These tools help you assess the exempt status of employees and help measure the financial impact of reclassifying employees to non-exempt status or raising salaries to the new required threshold. Please contact the Wage and hour Center of Excellence at Totalsource.FLSA@adp.com or 1-866-400-6011 (option 6) if you need or have forgotten your user ID and/or password.

Review Our Toolkit. We have also previously provided you with a toolkit containing an overview our people and technology solutions to help you comply with the new regulations, best practice guidance and sample employee communications. The updated Employer Toolkit is available on FormSource in the Payroll section. Keep in mind that most states require employers to provide written advance notification of any pay changes. Missouri employers for example must provide a 30-day advance notice of any pay decrease.

Identify Potentially Impacted Employees. You should review the Toolkit report instructions on pages 8 and 9 to identify employees that are salaried exempt and making less than $47,476/year ($913/week) and separately, those employees earning less than $134,004/year who may qualify for the highly compensated employee exemption. The individual accessing reports must have practitioner access rights.

Note that this report captures all employees listed as exempt (it is not limited to those who must be paid on a guaranteed salary basis; the exemptions at issue under the new regulations – administrative, executive, professional (excluding doctors, lawyers and teachers) and computer related professional (if the employer is choosing to pay on a salary basis) exemptions).  The salaries of impacted exempt employees must be raised to the new required standard salary threshold by December 1, 2016 or they will be entitled to overtime pay.

As noted above, the updated Employer Toolkit is available on FormSource in the Payroll section.

Leverage On-Demand Videos. The Toolkit referenced above also includes on-demand videos covering frequently asked questions. The five videos can be accessed by clicking the hyperlinks below (the videos are hosted on an ADP YouTube page).  We recommend that you listen to these webcasts if applicable to your company.
 

The New FLSA Salary Basis Test Effective December 1, 2016

Best Practices for Communicating with Employees Impacted by the New FLSA Regulations

Overtime Myths and the FLSA 

Sales Employees and the FLSA

FLSA Coverage of Non-Profits and Churches

Access an On-Demand Webcast. If you were unable to attend our October 13, 2016, webcast titled “50 Days to Overtime Compliance; Are You Ready?” you can access it on demand by clicking this registration link.  The webcast is designed to help clients prepare for the effective date of the new regulations. The webcast will provide a brief overview of the new regulations with a strong focus on how best to prepare by leveraging our people and technology solutions.

ezLaborManager Users. In light of the new FLSA regulations, many employers will need to convert previously overtime exempt employees to non-exempt status.

After you have completed your employee status changes in My TotalSource, clients using ezLaborManager with ADP TotalSource, will need to update the impacted employees “Paygroup” setting in ezLaborManager. The information below provides the steps you should take in My TotalSource to update the employee’s Paygroup in ezLaborManager.

We are committed to helping our clients comply with the new regulations. Please do not hesitate to contact the Wage and hour Center of Excellence at Totalsource.FLSA@adp.com or 1-866-400-6011 (option 6) or your Human Resources Business partner if you have any questions.