Strategies for Responding to the Changes in FLSA Overtime Eligibility

1. Webinar Details
Start Time: 2:00pm EST
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Welcome!
Employer Solutions

2. Webinar DetailsWebinar DetailsWebinar Details
• Presentation is roughly 1 hour
• All phone lines are muted
• Slide deck and access to video recording will be made available
• If anyone has any questions during this webinar – please type them in your
Questions Box located at the bottom of your webinar panel
| Employer Solutions

3. Webinar DetailsToday’s Presenter
Mark Boutilier | Net@Work
Senior Solutions Engineer
• Over 30 years developing and implementing HR and Payroll solutions
• HR Practitioner for over 10 years
• Sage HRMS Certified trainer and consultant
• American Payroll Association Member
| Employer Solutions

4. Webinar DetailsWebinar DetailsToday’s Agenda
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 Review of Changes
 Tools for Analysis
 Implementation Options
 Tools for Monitoring
 Net@Work Survival Kit

5. Webinar DetailsFair Labor Standards Act
| Employer Solutions
US Employers are
required to pay their
employees 1 and ½
times their regular
hourly rate for hours
worked over 40 in a
week
“Duties” Test
Salary Test
“White Collar”
Exemption From
Overtime Provisions
of Fair Labor
Standards Act
Minimum Salary Threshold
Highly Compensated
Employee Salary
AND

6. Webinar DetailsFinal Rule signed May 18, 2016
| Employer Solutions
Last increase
to FLSA wage
was in 2004.

7. Webinar DetailsFinal Rule Takes Effect December 1st 2016
| Employer Solutions

8. Webinar DetailsKey Changes to Salary Test
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• Minimum Salary Threshold increase from $23,660 to $47,476 annually
• Highly Compensated Employees minimum salary increases from
$100,000 to $134,004
• Threshold will be automatically updated every three years
• Nondiscretionary bonuses, commissions or incentive pay may be used to
meet up to 10% of the required salary threshold
• Employers can make ‘catch up’ payments quarterly to meet the threshold

9. Webinar DetailsAnnual Increase
| Employer Solutions
$47,476 per year
$913 per week
$22.825 per hour

10. Webinar DetailsThree Tests for Salary Exemption under FLSA
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• Salary Basis Test (unchanged except for 10% bonus)
• Salary Level Test (increased 100% effective 12.1.16)
• Job Duties Test (unchanged)
Critical: All 3 tests must be met to qualify.

11. Webinar DetailsDuties Test
| Employer Solutions
Section 13(a)(1) of the FLSA provides an exemption from both
minimum wage and overtime pay for employees who are
employed in a bona fide:
• Executive;
• Administrative;
• Professional; or
• Outside Sales capacity.
Certain computer employees may be exempt professionals under
Section 13(a)(1) or exempt under Section 13(a)(17) of the FLSA.

12. Webinar DetailsFor a deeper dive . . . . .
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13. Webinar DetailsFor a deeper dive . . . . .
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14. Webinar DetailsAnalyse Workforce
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15. Webinar DetailsAnalysis Tools
| Employer Solutions
• Benefit Eligibility Rules
• Job Code Configuration
• Employee Census
• Employee FLSA Group Status
• Employee Position in Grade
What is the current status of your workforce?

16. Webinar DetailsAnalysis Tools
| Employer Solutions
• Benefit Eligibility Rules
• Job Code Configuration
• Employee Census
• Employee FLSA Group Status
• Employee Position in Grade
What is the current status of your workforce?

17. Webinar DetailsAnalysis Tools
| Employer Solutions
Are your benefit eligibility rules different for ExemptNon-exempt?

18. Webinar DetailsAnalysis Tools
| Employer Solutions
Job Codes by Exempt Status and Salary Grade

19. Webinar DetailsAnalysis Tools
| Employer Solutions
What is the current status of your workforce?

20. Webinar DetailsAnalysis Tools
| Employer Solutions
What is the current status of your workforce?

21. Webinar DetailsAnalysis Tools
| Employer Solutions
Employees by FLSA Grouping

22. Webinar DetailsAnalysis Tools
| Employer Solutions
Employees by Position in Grade

23. Webinar DetailsTracking Effected Employees
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• Actual hours worked
• Responsibilities
• Potential for Overtime

24. Webinar DetailsAnalysis Tools
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Overtime Calculator

25. Webinar DetailsWhat changes do we implement?
| Employer Solutions

26. Webinar DetailsPossible Responses
| Employer Solutions
• Do nothing – salaried employees already meet test or could
with incentives
• Increase salaried employees wages to meet the new test
• Reclassify the employees as hourlynonexempt and pay
overtime
• Restructure workforce or particular jobs – reassign duties to
keep job duties to 40 hours
What are some possible responses?

27. Webinar DetailsIncrease weekly wages to $914
| Employer Solutions
• May need to increase again in three years
• Increased wage expense (wages and fringe)
• Pay grade compression
• Resentment on part of co-workers.

28. Webinar DetailsReclassify Job as Non-Exempt
| Employer Solutions
• Possible overtime expense
• ‘Loss’ of Exempt status
• Retraining and enforcement of timekeeping and overtime
policies
• Possible change in benefit or PTO policies
• Job Sharing or other responsibility reductions to reduce OT.

29. Webinar DetailsReclassify Job as Salaried Non-Exempt
| Employer Solutions
• Possible overtime expense
• Retraining and enforcement of timekeeping and overtime
policies
• Job Sharing or other responsibility reductions to reduce OT
• Greater administrative oversight required.
• Reduced overtime cost.

30. Webinar DetailsFluctuating Work Week
| Employer Solutions
• Salaried Non-exempt must be paid a regular salary at least the
minimum wage.
• Hours over 40 in a week are paid at the employees ‘regular’
rate times 1/2
• Overtime hours are calculated weekly, regardless of pay
frequency.

31. Webinar DetailsFluctuating Work Week - Examples
| Employer Solutions
Example 1 – Employee works 45 hours this week
• Weekly Salary $800
• Regular Rate 800/45 = $17.78
• Overtime Premium 17.78/2 = $8.89
• Pay for this week: 800 + (5*$8.89) = $844.45
• Pay under traditional OT: (40*$20)+(5*$30)= $950.00

32. Webinar DetailsFluctuating Work Week - Examples
| Employer Solutions
Example 2 – Employee works 42 hours this week
• Weekly Salary $800
• Regular Rate 800/42 = $19.05
• Overtime Premium 19.05/2 = $9.52
• Pay for this week: $800 + (2*$9.52) = $819.05
• Pay under traditional OT: (40*$20)+(2*$30)= $860.00

33. Webinar DetailsFluctuating Work Week - Examples
| Employer Solutions
Example 3 – Employee works 35 hours this week
• Weekly Salary $800
• Pay for this week: $800.00
• Pay under non-exempt: (35*$20)= $700.00

34. Webinar DetailsFluctuating Work Week Setup
| Employer Solutions

35. Webinar DetailsWebinar Details
35

36. Webinar DetailsFluctuating Work Week - Catches
| Employer Solutions
• Administration - What is the employee’s ‘regular rate’ this week?
• Fixed Salary – Fixed means fixed, no deductions of pay for unpaid
time.
• Actual work schedules hours must fluctuate.
• Unpopular with DOL – Don’t look for any breaks if audited
• State Laws – Some states do not recognize FWW as a legitimate
alternative.

37. Webinar DetailsMonitor Workforce
| Employer Solutions

38. Webinar DetailsMonitor Tools
| Employer Solutions
• Crystal Reports
• Pay Information Export
• Payroll Year to Date Information
• Alerts
• Employees Hired Below Minimum
• Overtime Paid
• Overtime Paid Dashboard
How are we doing?

39. Webinar DetailsMonitor Tools
| Employer Solutions
How are we doing?

40. Webinar DetailsMonitor Tools
| Employer Solutions
New Hires or Promotions below minimum

41. Webinar DetailsMonitor Tools
| Employer Solutions
Automated Monitoring of Overtime Use

42. Webinar DetailsNet@Work FLSA Survival Kit
| Employer Solutions
$1100
$500
Free Resources
• Free Resources
• Crystal Reports
• Sage Alerts – Overtime Alerts
• 3 hours of consulting to install and
configure Alerts* and Crystal Reports
• Free Resources
• Six Crystal Reports
• One hour consulting to install and configure
the reports.
• Links
• Sample Policies
• FLSA Overtime Decision Grid
• Final Overtime Rule Calculator.xls
How can Net@work Employer Solutions help?
*Sage Alerts and Workflow must be implemented

43. Webinar DetailsUpcoming Seminars
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44. Webinar DetailsThank You For Attending!
Mark Boutilier | Net@Work
Senior Solutions Engineer
(P) 800-719-3307 Ext 4805
mboutilier@netatwork.com
| Employer Solutions
800-719-3307
www.netatwork.com
netatwork.com/blog
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