FLSA Overtime Requirements Go Into Effect December 1

PPAI has lent its support to bipartisan legislation in the House and Senate that would delay and provide relief for new rules issued by the Department of Labor (DOL), which address some of the most commonly relied-upon exemptions to the Fair Labor Standards Act’s (FLSA) overtime requirements that are currently set to go into effect December 1.

The DOL’s new rules raise the salary amounts employees need to be paid to qualify as exempt, and it has solicited comments on whether to change the requirements related to the duties necessary for employees to qualify as exempt. The new rules increase the minimum salary threshold from the current level of $455 per week to $913, which many believe will result in surges in costs and losses in employee flexibility.

PPAI expects the rules to have several negative effects including job losses, lowering of overall compensation and a move from salary to hourly wage employment. Employers may also have to reclassify some employees to an hourly rate status. Additionally, some observers predict there will be a move to more part-time jobs, outsourcing and automation.

The Overtime Reform and Review Act (S.3464) would phase in the new salary threshold in four stages over five years, starting with an initial increase to approximately $36, 000 on December 1, followed by a pause year in 2017 to allow further evaluation. After this, an annual salary increase will take place until the new salary threshold of $47,476 is realized on December 1, 2020. However, should S.3464 pass in the Senate, it is expected to face a presidential veto, which it does not have enough votes to overcome.

PPAI is monitoring the issue and will work with fellow members of the Partnership to Protect Workplace Opportunity to support legislation that limits the impact of these new rules on employers and employees nationwide. Industry members can add their voice to PPAI’s in taking this message to the Senate by clicking here.

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