The Fair Labor Standards Act (FLSA) is changed their overtime regulations. Ensure you're in the know and compliant. Learn:
- Key provisions of the final FLSA ruling
- How employers & employees will be affected
- Recommendations for staying compliant
3. Presenter Biography
6/20/16 Atlas Compensation Partners, LLC Confidential
Tamara Brownfield
§ President and Principal Consultant of Atlas Compensation Partners, LLC
§ Nearly 20 years of experience, from analyst to boardroom
§ Experience in all areas of compensation (global broad-based, sales compensation, and executive)
§ Industry experience: financial, manufacturing, chemical, technology, education, and software
§ Expertise: design and implementation of compensation philosophy, global banding and salary structures,
global incentive plans, executive compensation structures and programs, and global reward and recognition
programs
§ Compensation certifications: World at Work designations of Certified Compensation Professional (CCP), Global
Remuneration Professional (GRP), and Certified Executive Compensation Professional (CECP)
§ Education: Bachelor’s of Science degree in Industrial Management from Carnegie Mellon University
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6. Summary of Final Overtime Rule
6/20/16 Atlas Compensation Partners, LLC Confidential
§ The standard salary level threshold is set at the 40th percentile of weekly earnings
for full-time salaried workers in the lowest-wage Census region (currently the
South)
⎕ $47,476 per year ($913 per week)*
§ The Highly Compensated Employees (HCE) salary threshold is set at the 90th
percentile of full-time salaried workers nationally
⎕ $134,004 annually
§ Employers may apply non-discretionary bonuses and incentive payments
(commissions) up to 10% of the standard threshold level; payments must be
made on at least a quarterly basis
§ No changes were made to the duties tests
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*Exceptions:
§ American Samoa ~ salary level threshold updated to $767 per week (previously $380)
§ Motion Picture Industry ~ salary level threshold updated to $1397 per week (previously $695)
§ Computer Professionals ~ if paid hourly, threshold is $27.63/hour
7. Summary of Final Overtime Rule
6/20/16 Atlas Compensation Partners, LLC Confidential
§ Beginning January 1, 2020, both the standard salary level threshold and the HCE
salary threshold will automatically update every three years
§ The standard salary threshold is tied to the 40th percentile of full- time salaried
workers in the lowest-wage region
§ The HCE salary threshold is tied to the 90th percentile of full-time salaried
workers nationally
§ The Department of Labor will post new salary levels 150 days in advance of their
effective date (e.g. August 1, 2019 for the first update)
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8. Summary of Final Overtime Rule
6/20/16 Atlas Compensation Partners, LLC Confidential 8
Component
Current Rule
(2004-November30, 2016)
Final Rule
(Effective December 1, 2016)
Salary Threshold Level $455/week $913/week
40th
percentile of weekly earnings for full-time salaried
workers in the lowest-wage Census region (currently the
South)
HCE Annual Salary
Threshold Level
$100,000 $134,004
90th percentile of full-time salaried workers nationally
Automatic Update None Every 3 years
Bonuses No provision to include non-discretionary
bonuses/incentives toward the standard salary
threshold level
Up to 10% of the standard salary threshold
can be made-up of non-discretionary
bonuses/incentives paid at least quarterly
Duties Test Visit the Wage and Hour Division of the
DOL:
https://www.dol.gov/whd/
No changes
9. Employer Compliance &
Considerations
6/20/16 Atlas Compensation Partners, LLC Confidential
§ Employers have until December 1, 2016 to come into compliance
§ Steps to take:
⎕ Identify exempt employees below $47,476 and HCEs below $134,004
§ Include salary and non-discretionary bonus/incentives (paid at least quarterly)
§ See sample worksheet in Appendix
⎕ Determine action
§ See table in Appendix
⎕ Review budget and HR/Payroll systems implications
⎕ Training, if needed
§ Recording time worked
§ Rules around overtime, time worked, time not allowed to work
⎕ Communication!
§ Manager communications
§ Employee communications 9
10. Employer Compliance &
Considerations
6/20/16 Atlas Compensation Partners, LLC Confidential
§ Considerations
§ If newly non-exempt role has exempt duties
⎕ Move duties to another role or remain in current role?
§ Pay compression
§ Salary ranges (minimums below standard threshold?)
§ Address the potential of having exempt and non-exempt employees in the same
role
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12. Sample Worksheet
6/20/16 Atlas Compensation Partners, LLC Confidential 12
Include all current exempt employees below $47,476 threshold
Title Grade/Band
Annual
Salary
Hourly Rate (Salary
divided by 2080
hours)
Actual/Estimated
Typical Hours Worked
in Workweek
Expected Current
Bonus/Incentive (if
applicable)
Expected Bonus/Incentive after
Re-class or Change in Salary (may
not be able to determine yet)
$ Amount
Below New
Threshold
# of Hours Worked over 40
in a Workweek (0 if work
less than 40)
With this information, you can then calculate:
§ Current weekly salary rate, including non-discretionary quarterly bonus, and determine the amount below
the new threshold
§ Weekly salary rate, including non-discretionary quarterly bonus, after re-classification or salary change
§ Potential impact of overtime paid if moving from exempt to non-exempt
13. Some Alternatives
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Alternative Resulting in Increased Labor Costs Alternatives Resulting in No Change to Labor Costs
Adjust salaries up to the new standard threshold level Reclassify to non-exempt without pay reduction but
limit hours per week to 40; no additional staff
Reclassify to non-exempt without pay reduction or
decrease in hours
Reclassify to non-exempt, reduce pay to offset
overtime
Reclassify to non-exempt without pay reduction but
limit hours per week to 40; add to staff
Adjust salaries up to new standard threshold to
maintain exemption; cut staff to offset costs
Reduce or eliminate bonus/incentive eligibility to
offset costs
Remember: In addition to meeting the standard salary threshold, for a job to be classified as exempt, it must also meet the requirements of
the exempt duties test
15. 6/20/16 Atlas Compensation Partners, LLC Confidential
Atlas Compensation Partners, LLC (“Atlas”) is a global and executive compensation consulting firm focusing
on partnering with its clients to design and build effective compensation programs. Led by its founder,
Tamara Brownfield, Atlas works as an extension of your team throughout the full process of developing a
philosophy, designing programs, and program implementation. Atlas will partner with you to design
effective executive and employee compensation programs to retain, engage, attract, and reward your
teams.
Tamara Brownfield, CCP, GRP, CECP, President and Principal Consultant, has experience, knowledge, and
expertise in areas of global compensation, sales compensation, and executive compensation in a variety of
industries including financial, manufacturing, chemical, technology, education, and software. Her nearly
20 years of experience, from analyst to Boardroom, include design and implementation of: compensation
philosophy, global banding and salary structures, global incentive plans, executive compensation
structures and programs, and global reward and recognition programs.
Tamara has earned World at Work designations of Certified Compensation Professional (CCP), Global
Remuneration Professional (GRP), and Certified Executive Compensation Professional (CECP). Tamara
holds a Bachelor’s of Science degree in Industrial Management from Carnegie Mellon University.
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