Just as employers are staring down the December 1st deadline with the revised FLSA requirements for exempt employees, a group of Democratic lawmakers have proposed new legislation called H.R. 5813 – The Overtime Reform and Enhancement Act. This act would phase in the new salary level requirements rather than having that level jump to $47,476 on December 1st.
Under their proposal, the new minimum pay schedule for exempt employees would be:
- $35,984 on December 1st, 2016
- $39,814 on December 1st, 2017
- $43,645 on December 1st, 2018
- $47,476 on December 1st, 2019
While this proposal sounds a lot like the light at the end of the tunnel that many employers have been hoping for, we think that this is more like following a lost friend with a flashlight through the woods. It may seem like a good idea, but it’s unlikely to get you to your destination.
Consider the obstacles in the way of this proposal:
- Congress doesn’t reconvene until September to even consider this bill.
- When congress does get back together, it is likely going to be overly focused on this little issue referred to as the budget (which must be finished by the end of September to avoid a shutdown) that happens to include some challenging topics like funding the Zika virus.
- At the end of September, congress goes back out on vacation for the month of October so that its members can focus on their election parties.
- Even if congress does pass this legislation, the President will not support legislation that changes a requirement that he was instrumental in driving and will veto any challenges to it.
- It’s extremely doubtful that congress could gather the support necessary to overturn a Presidential veto on this legislation. Especially during elections.
That brings us to December 1st. Our recommendation is that you should take the steps necessary to be in compliance with the new regulations. To do that, ensure that your employees are accurately classified as exempt and non-exempt under the FLSA. Then, if raising salaries for your entry level exempt employees to obtain the minimum is not economically feasible, consider reclassifying them as non-exempt and paying them on an hourly basis.
Wishing this one away just isn’t likely to happen, so it’s best to prepare now.
Call us if you have questions or need support making this happen.