Three-Weeks to the Overtime Effective Date: Communicate With Employees Regarding Planned Compensation Changes, Overtime Eligibility

Only three weeks remain until the U.S. Department of Labor’s revised overtime regulations under the Fair Labor Standards Act (FLSA) become effective. With the December 1, 2016, compliance deadline rapidly approaching, employers need to be communicating with employees who will be affected by the overtime changes. In addition, following Tuesday’s surprising presidential election results, employers also should consider refining their communications to take into account potential contingencies.

As we have previously reported, the revised FLSA regulations will more than double the minimum salary requirements for the FLSA’s major white-collar exemptions from $455 per week to $913 per week. Employees who do not meet the salary requirements and job duties requirements for one of these exemptions, or who do not fall within some other exemption, generally are entitled to receive overtime compensation under the FLSA when they work more than 40 hours in a workweek.

Employers are taking various approaches to comply with the final regulations. Some employees are receiving pay increases to keep them exempt from the overtime requirements. Others are being reclassified as non-exempt (also known as “overtime eligible”) and are seeing their compensation plans adjusted in a variety of ways.

As a general rule, employees should always be notified prospectively of any changes that are going to be made to their compensation, and some states and municipalities have specific requirements regarding the timing and content of such notices.

In addition to notifying employees about compensation changes, employers need to keep track of the hours worked by non-exempt employees. Thus, it is important for employers to communicate with non-exempt employees regarding the necessity to accurately record all hours worked, to provide training on the use of timekeeping systems, and to prohibit “off the clock” work by these employees. Supervisors and managers of non-exempt employees also need to be properly trained and informed.

As we have discussed in previous blog posts, although there are legislative and legal efforts underway to challenge the FLSA regulations, employers cannot assume that there will be any delay in the effective date. Instead, they must plan to meet the December 1 deadline and should communicate their planned changes in advance of that deadline and in compliance with all legal obligations.

Tuesday’s election results also raise the question of whether President-elect Donald Trump will take steps to suspend or reverse the regulations after taking office. As the outcome of the election itself demonstrates, making such predictions is difficult. Furthermore, the inauguration of the new president does not take place until January 20, 2017.

However, in light of any potential short-term or long uncertainty regarding the future of the regulatory changes, employers may want to revise their planned communications or update their prior communications to account for potential contingencies.

For example, an employer may want to state that, although it intends to make changes in anticipation of the revised regulations, it is possible that the changes the employer currently intends to make may be delayed, adjusted, or discontinued either before or after December 1, 2016, depending upon various post-election legal and/or business developments.

A more detailed white paper regarding communications plans, “Communication Considerations When Implementing Changes to Comply With the Final FLSA Part 541 Overtime Regulations,” may be found on Ogletree Deakins’ Overtime Solutions Center.