BEWARE PENDING FLSA SALARY INCREASES

By November 16, 2015Blog

Who wouldn’t like their salary to increase by 10 percent, 20 percent or even a jaw dropping 50 percent?

As many organizations are aware, the U.S. Department of Labor (DOL) is preparing to make substantial changes to the salary level test for determining exempt/nonexempt status, thereby making many current exempt workers no longer exempt and therefore eligible for overtime pay.

Under the federal Fair Labor Standards Act (FLSA) there are exemptions from minimum wage and overtime pay for executive, administrative, professional, and computer employees. The current federal rate (California & New York are higher) is a weekly salary of $455 (or $23,660 annually). The new rate is proposed at $970 per week (or $50,440 annually). This more than doubles the current level.

What’s a nonprofit to do?

First, take a look at your current exempt qualifying positions. Review the job descriptions and actual duties those positions perform and determine how far off from the new salary they are. Think, how  important are those positions? Can you condense positions and transfer duties to another exempt position?

Do the math.

For example, maybe it will cost less in the long run to increase several staff’s salaries to meet the new level. Thereby avoiding five to ten hours of overtime per position each week.

Increase your headcount.

If you have reduced exempt positions, you may need to hire additional full or part time hourly/nonexempt staff to insure that the nonexempt duties are taken care of without the need for overtime pay.

Be well versed in the FLSA record-keeping laws.

Those former exempt employees who didn’t track their time are now tracking each and every minute worked, as the law requires. You need to pay appropriately.

Think about communication.

How are you going to get the word out? Be aware that your employees may already be discussing these upcoming changes and anticipating large increases. If your organization decides to pay for hours worked and decrease the number of exempt positions, realize that many of your current exempt employees may view the change as a demotion. Consider having both private and group discussions to control morale. Education for all on the law may be your friend. Be as open and transparent as possible.

No matter what course you choose, there will be issues. Be ready to weather the rough spots with humor, communication and facts.

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