They’re here!  The new and long awaited Department of Labor guidelines on exempt employees have been released.  After much debate and deliberation they have selected:

  • A minimum salary of $47,476 in order to be eligible to be an exempt level employee.
  • This amount will be adjusted every three years going forward.
  • Employers need to be compliant by December 2016.

Here’s a link to the new rules.

What does this mean for employers?  With the exception of the salary component, the tests for determining if an employee qualifies as an exempt employee have remained unchanged.

What does this mean for employees?  Employees who are truly performing exempt level work and are earning slightly below the $47,476 threshold, may see a bump in pay in order to maintain their exempt level status.  For others, it probably means a shift to non-exempt status.

Is becoming a non-exempt employee a bad thing?  It depends.  Non-exempt employees are eligible for overtime, so there could be opportunities for additional income and reimbursement for time that previously would not have been compensated.  For employers, moving employees to a non-exempt status means additional record keeping of time worked and additional overtime liabilities.

What’s the hardest part of this?  Many employees take a lot of pride in attaining a professional level role.  Reclassifying them as hourly and asking them to track and record their time is often perceived as a demotion.  Our experiences with this have been that this can be a very emotional change for employees and it needs to be treated carefully.

Next steps?  The changes in the regulations have created a lot of focus on the differences between exempt and non-exempt employees.  This is a perfect time for employers to reevaluate roles that may have evolved and may or may not currently be classified accurately and to adjust accordingly.  If changes need to be made, this is the time to reassess and adjust as necessary to make certain that all of your positions are classified correctly and to communicate changes to employees.

Also, if you are looking for investment advice, this might be the time to buy stock in timeclock companies.

Is your organization rolling out these changes in a unique or creative way?  Share your best practices with us, we’d love to hear from you about it!

Kevin B:  Punched out at 7:45 a.m.

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