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New FLSA Overtime Rules: Don’t Be Frightened!

It’s been a few short weeks since the Department of Labor (DOL) announced the final changes to the Fair Labor Standards Act (FLSA) overtime regulations. These are the first major changes to the overtime regulations in more than a decade and could impact more than four million U.S. workers.

As business owners come to grips with the fact that these regulations may well have an impact on their bottom line, the questions have been pouring in. What’s interesting is that employers are not just seeking information about the changes to the overtime regulations and what they mean. Many also are trying to determine if they are even in compliance with the current regulations! The new regulations have created a heightened state of awareness and angst for the employer community.

Let’s face it: Business owners are busy and employment laws and regulations are not something they focus on regularly. According to ADP research from late 2015, only 25 percent of small business owners and 50 percent of midsized employers were aware of and taking actions to comply with the new overtime regulations.

With a change of this magnitude, education and support are key, and many small and midsized business owners are looking for some direction to help them emerge from this regulatory storm in good condition. As the largest professional employer organization (PEO) in the U.S., with more than 400,000 worksite employees, ADP TotalSource is proactively helping our clients comply with the new regulations, which take effect December 1, 2016.

For instance, an online exemption analysis tool is now available to all of our PEO clients. It helps them determine whether an employee is likely to be considered exempt from overtime requirements under federal and state laws. Additionally, once clients determined their status, a cost estimating tool is also available to help decide how to treat exempt employees earning less than the federal minimum salary required to be paid under most common exemptions. It will calculate the estimated cost of:

  • Raising an employee’s salary to meet the proposed 2016 minimum.
  • Reclassifying the employee as non-exempt and paying overtime, at the same salary level or hourly rate equivalent (salary/40 hours).
  • Reclassifying the employee as non-exempt, but setting the hourly rate to minimize additional labor costs (cost neutral solution).

In addition to support from a client’s dedicated Human Resource Business Partner, ADP TotalSource clients will also have access to the expertise of a team dedicated specifically to the new FLSA regulations. This team will assist clients directly with navigation of the technology tools and recommend resources to help comply with the new regulations.

Whether or not you’re choosing to use a PEO to help you navigate these new regulatory waters, the first step for employers wanting to remain compliant is to analyze the current workforce and have a solid plan in place to implement required changes. For those using third-party partners, look for providers that combine the strength of their service teams with intelligent technology solutions for help to implement any changes.

This post was contributed by Maria Black, president, ADP TotalSource®.

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