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The 2016 US Election and Your Staffing Model: The FLSA

The 2016 US Election and Your Staffing Model: The FLSA
From Recruiter - August 26, 2016

The US presidential election is less than 100 days away. This is the first of a three-part series that explores how the election may influence your staffing models.

FLSA and Your Staffing Model

Many readers are probably familiar with the changes that the Department of Labor (DOL) made to the Fair Labor Standards Act, or FLSA. This federal law sets forth duties tests and a salary threshold to determine which employees are exempt from overtime (in other words, which employees are salaried).

The new rules dont change the duties tests for various exemptions (executive, administrative, ministerial, and learned professional are just a few). What has changed is the threshold for exemptions. Right now, it is $455/week, or $23,660/year. The new regulations will increase this to $913/week or $47,476/year. Note that this is higher than some state exemption thresholds (NY: $35,100; CA: $41,600).

These limits will be updated every three years beginning in 2020 to maintain the level at the 40th percentile of full-time salaried workers in the lowest-wage census region (which is currently the South). The DOL estimates that the salary threshold will be $51,168 when it is initially adjusted in 2020. This is significant because for the first time in history the salary level will be set automatically every three years and wont require additional rule-making. For employers, this means that the government wont take into account changing economic conditions, specific impact on certain industries, or regional differences. It also foregoes the publics input on the rule-making.

The Rules Are Effective December 1, 2016

Becausethe new rules are effective before the next president is sworn in, this is one area that you cant ignore. Sure, its possible that if Trump wins the election, he may order the DOL to review this rule and possibly revise it. But that takes time, and in the meantime, the law will be in effect.

Staffing Model Considerations

Here are a few things to consider as you review your staffing model:

- Whats the culture of your company? Is it nimble and open to change, or will it take a while for your executive team to understand the impact of these changes?

- How will your budget be impacted? Becausethe duties test hasnt changed, its possible to simply give some of your employees increases to keep them salaried. You may discover that the salary increases more than offset potential overtime costs.

- How will your employees react? In some cases, you may review a job description and realize that the position doesnt meet the current duties testand that its truly not exempt from overtime. On the other hand, even if the position meets the duties test, it simply may not be feasible to give increases to employees to keep them salaried. This means that some of your employees will have to start punching in/out at the beginning and end of the day and for meal periods. This is a huge change, and some employees may consider this a demotion.

- If employees are reclassified into hourly (non-exempt) roles, it may be possible to supplement your staffing model with part-time employees. Do you have positions that can fit into a part-time model?

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