A new survey released by World at Work explores some possible results of the new Fair Labor Standards Act overtime rule that raises the salary level test from $415 a week to $913 a week effective December 1, 2016. The survey found that nearly half (49 percent) of employers who plan to reclassify current exempt employees to nonexempt will also need to reduce workplace flexibility options for those employees.
This makes sense. The timekeeping requirements for nonexempt employees is more detailed and administratively burdensome for employers; all time worked must be accounted for and paid to the employees accordingly.
The survey also found that 63 percent of employers plan to wait until the pay period that includes December 1 to make any changes. According to MSEC advisers, employers might want to start implementing the changes earlier if they can. This will allow them to make sure they are compliant by the effective date, not on it. If there are any payroll processing issues, benefit changes that need to occur, etc., employers will want to have those solved before the effective date.
The survey also found that 69 percent of responding employers said costs will or already have increased due to changes they will make or have made to comply with the new salary basis. Sixteen percent of employers with fewer than 500 employees will raise salaries to comply, while less than 10 percent of very large employers (up to 40,000 employees) will do so.