THE NEXT FLSA TARGETS: The duties test and nondiscretionary bonuses
An Employer’s Guide to the Proposed FLSA Overtime Regulation ChangesPart 3
Last week, we ran the second installment of our three-part myHR Blog series on the Department of Labor’s (DOL) newly proposed changes to the Fair Labor Standards Act (FLSA) overtime regulations, which came out in late June. The changes would impact 11 million workers in the U.S., and they are a big concern for human resources professionals and employers all over the country. Everyone is trying to figure out what they might be expected to do to remain compliant, and yet stay profitable, if and when the regulations will go into effect.
myHR Partner has put together this three-part series to keep you up-to-date and help you understand the FLSA overtime regulations being proposed, so that you can best prepare for what may come in the months ahead.
THE NEXT FLSA TARGETS: The duties test and nondiscretionary bonuses.
While the DOL’s newly proposed changes to the FLSA overtime regulations cover a lot of ground, two things that they do not cover specifically are duties testing and nondiscretionary bonuses. The regulation instead acknowledges the challenges associated with duties testing and requests for feedback from employers. The Department also seeks feedback from employers about the possibility of including nondiscretionary bonuses in the future to satisfy part of the standard salary requirement.
What do you think about that?
From the Society of Human Resources Management’s (SHRM):
In an unexpected move, the DOL did not suggest specific modifications to the 541 FLSA duties test. Instead, the proposed regulation asks a series of questions seeking input on whether changes are needed to the duties test and if so, what changes should be made. The department also seeks input on what types of examples to provide in the final regulation to illustrate how the exemptions may apply to specific jobs.
Changes made in the future by the DOL to the primary duty test could result in highly compensated and professional employees losing their exempt status. This could impact the flexibility, career advancement opportunities, and individual autonomy afforded to workers by an the exempt status. All of this, according to SHRM, will have a significant impact on employee morale.
The DOL has requested that comments be submitted by September 4, 2015. Organizations like SHRM are quickly trying to gather input from their members to provide comprehensive comments on the proposal.
Issues with overtime are starting to get real, people.
We received an alert from SHRM highlighting recent litigation over the classification of employees under FLSA guidelines and entitled to overtime pay. The case involved two medical records coders who sued their employer, Lifecare, alleging that the company had misclassified them as exempt employees and failed to pay them overtime compensation. The company claimed that the employees were exempt under the administrative and professional exemptions.
From the SHRM alert:
The case went to trial before a jury. While there was no dispute regarding the salary basis requirement, the parties disagreed as to whether the employees’ duties constituted administrative or professional duties. Lifecare introduced evidence establishing that [Carmen] Cunningham and [Kathy] Radtke were exempt administrators because Cunningham supervised between nine to 22 coders and because both Cunningham and Radtke provided training to physicians and worked independently to evaluate and revamp coding procedures. Furthermore, Lifecare introduced evidence establishing that they were exempt professionals because both positions required and both employees possessed certifications relevant to medical coding. Despite this evidence, the jury found that the employees were nonexempt.
Lifecare unsuccessfully appealed the district court and the D.C. Circuit Court. The courts asserted that although some evidence established that the employees performed exempt duties, the employees had introduced conflicting evidence at trial showing that most of their time was spent on nonexempt duties and that the jobs did not require advanced knowledge.
In the end, employers bear the burden of establishing that employees fall within a recognized overtime exemption. That is why SHRM is emphasizing the importance of having accurate and up-to-date job descriptions, as they will go a long way in allowing employers to establish whether or not a particular job is exempt or nonexempt, and if employees performing that job are entitled to overtime or not.
If you haven’t yet checked it out, consider visiting SHRM’s HR Policy Action Center dedicated to information and advocacy efforts surrounding the upcoming overtime regulations. It is worth bookmarking in your browser as new information becomes available.
An FLSA audit has never been more timely.
At myHR Partner, we have been conducting in-depth FLSA audits for years. Conducting one in advance of these proposed changed, will not only assure you are current with the federal FLSA requirements, it will help you plan for the potential impact both financially and for your potential upcoming staffing changes. Our clients rely on the FLSA audit to properly classify employees based on the most current FLSA laws. To find out more about our FLSA audits, contact us today.
We hope you enjoyed this series. Let’s stay connected!
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