Issue link: https://www.e-digitaleditions.com/i/751848
6 FEDA News & Views Industry Insights To Reclassify or Not? Working Through the Reclassifi cation Conundrum for Overtime Shelly Myers Executive VP, Human Resources Wasserstrom L ast May it was announced that the Department of Labor would have a new rule changing exemptions from overtime pay with a short window to the effective date of December 1, 2016. One thing was quite clear: This new rule would cost employers a lot of money. So what does it all really mean? The Fair Labor Standards Act (FLSA) has rules that defi ne whether or not a job is "exempt" or "nonexempt." It's not just the "salary rate" that determines this or the job title. Defi ning the real duties of the job is key. In other words, "what does this position really do?" As per the FLSA, "an employee who meets the salary level tests and also the salary basis tests is exempt only if he or she also performs exempt job duties." Without meet- ing the requirements of the duties tests, the dollar amount is moot. Everyone is talking mostly about the new minimum salary rate of $47,476 required spe- cifi cally for a "white collar employee" (exec- utive, administrative and professional workers) to be exempt. The new rule also allows employers to use nondiscretionary bonuses and incen- tive payments, including commissions, to satisfy up to 10 percent of the new standard salary level. Let's fi rst be clear who remains unaf- fected by these new regulations. ➤ Outside sales- There is no change to its provision that minimum pay is not required. ➤ Computer professionals- There is no change to computer professionals being paid the hourly rate of $27.63 per hour or more. ➤ Licensed professionals- There is no change for professional employees (e.g. lawyers, doctors) who are not required to be paid a salary or mini- mum pay. ➤ Certain retail employees- There is no change for retail employees paid on a commission under Section 7(i) exemption. Preparing for the December 1st Effective Date The current attempts by Congress to impose delays shouldn't be something you count on. First and foremost, you need to identify the current exempt positions in which your employees earn less than the required salary minimum. While you do your homework on rates of pay and auditing job duties, it is a good idea to send out a basic memo to all of your employees about the impending changes and don't just share what may happen. Explain why it's happening—so when you do have future discussions with reclassi- fi ed workers, they won't be caught off guard. Some employees will feel hurt and under-appreciated. Many place a premium on the prestige of being con- sidered an exempt employee, no matter how much we emphasize that it's just continued on page 53 The current attempts by Congress to impose delays shouldn't be something you count on. First and foremost, you need to identify the current exempt positions in which your employees earn less than the required salary minimum.