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Fair Labor Standards Act (FLSA)
Strategies for staying compliant
Proposed changes to the FLSA—expected to take effect in 2016—could dramatically increase the number of employees eligible for overtime pay. Now is the time for employers to prepare for what could be severe financial, operational, and workforce impacts.
Are you ready for New FLSA Regulations? Take our Cost Impact Readiness assessment
Your organization may be at significant risk of encountering unanticipated costs and issues associated with the new regulations….You need our help to get ready!
Score of 51–75: Fairly well prepared
While you have a good understanding of some of the issues and impacts of the new FLSA regulations, your preparation could be improved. Seeking help now could reap great dividends.
Score of 76–94: Well prepared
You’re clearly aware of many of the potential impacts of the new FLSA regulations on your organization, but some refinement of your analysis may yield significant cost savings.
Score of 95–100: Very well prepared
Congratulations, you’re ready! Quit your day job and write a book to teach others
Front-line operations, bottom-line implications
The US Department of Labor (DOL) is proposing to increase the threshold for employees who qualify for exempt status from $455 per week ($23,660 per year) to $47,476 per year. The DOL is also proposing to increase the threshold above which highly compensated employees are considered exempt from $100,000 to $134,004.1
The DOL anticipates that around 6 million current exempt employees across all industries will be converted to non-exempt status and will be eligible for overtime pay. As a result, their employers will see labor related expenses increase—regardless of the actions they take—and may face additional fallout from:
- Unbudgeted overtime costs
- Increased opportunities for employees to earn overtime
- Impacts to workplace and scheduling flexibility
- Necessary redistribution of work among their workforce
1US Department of Labor Fact Sheet: Proposed Rulemaking to Update the Regulations Defining and Delimiting the Exemptions for "White Collar" Employees http://www.dol.gov/whd/overtime/nprm2015/factsheet.htm
Complicated, costly, and urgent—HR should not go it alone
Employers should already be taking steps to assess, convert, and comply; the narrow 60- to 90-day window to be in compliance once the proposed regulation change becomes final makes it imperative to hit the ground running now.
HR should not assume that these changes only impact their area. The reclassification impact extends beyond HR compliance to operations, IT, and finance. It is vitally important for organizations to examine their exempt/nonexempt employee classifications and what changing employees will mean for their business. HR and business stakeholders need to put together a plan for securing the funding, making the necessary changes, and maintaining business continuity.
Deloitte can help employers in analyzing, planning, and budgeting for compliance with the FLSA updates in a way that fits your organization and supports its business strategies. Ask us for ways to find the funding for these changes hidden within your labor spending today.