This month’s client spotlight features Laura Liss of Patzik, Frank & Samotny Ltd. PFS has been a client of AZBS for 11 years. PFS celebrated its 25th anniversary earlier this year. PFS began as a corporate and securities boutique law firm and has expanded its practice areas, which include employment law, estate planning, healthcare, intellectual property, litigation, real estate and tax, to service the needs of its clients.
Laura Liss is Chair of PFS’ Employment Law Practice Group. She provides both legal and practical business advice on all phases of employment-related decisions. Laura regularly serves as a sounding board for business owners, executives and human resources professionals and assists them in successfully and efficiently navigating the various employment laws that affect their businesses. One of the things that drew Laura to PFS is the role the firm plays as outside general counsel to many middle market companies. PFS’s approach to client service appropriately reflects companies’ universal goal to minimize conflicts in the workplace that often lead to costly litigation.
One of the employment issues your business may be facing this Fall is how to prepare for the upcoming changes in the overtime rules under the Fair Labor Standards Act (“FLSA”), set to take effect on December 1, 2016. Generally speaking, employees must receive overtime pay for all hours worked over forty in a workweek at a rate of one and one-half their regular rate of pay, unless the employees fall under one of the FLSA’s statutory exemptions. Under the “white collar” exemptions (i.e. the exemptions for executive, administrative and professional employees), employees are “exempt” from the overtime pay requirements if they (1) are paid a salary of at least $455 per week (or $23,660 per year) and (2) meet the “duties test” for the exempt positions. As you may have heard in the news, the “duties test” is remaining the same, but the salary threshold to be exempt from overtime is more than doubling, to $47,476 per year.
This change could have a significant financial impact on businesses, unless you analyze your workforce and make necessary adjustments.
While there are various legislative efforts in the works to delay or stagger the impact of these new overtime rules, business should not bank on that possibility. If you have not done so already, now is the time to prepare for the changes. Below is a checklist PFS put together to help businesses prepare:
- Audit current employee classifications, salaries and job duties.
- Identify all employees classified as exempt/salaried (under the executive, administrative, or professional exemptions) who earn less than $47,476 per year.
- Consider job titles, annual salaries, hours worked and whether their employment is full-time or part-time.
- Review the jobs that the impacted employees are in and identify the number of employees who fall under and over the new salary threshold.
- Ensure your job descriptions accurately reflect the work actually performed.
- For employees who fall under the new salary threshold, consider the following:
- Increase exempt employees’ salary to meet the new salary threshold and keep them exempt; or
- Reclassify employees who no longer meet the salary test from exempt to non-exempt positions and determine an appropriate hourly rate.
- Begin tracking hours for employees who may be reclassified.
- Estimate how much overtime currently exempt employees work and how much it would cost to begin paying them overtime. In doing so, consider busier times of the year when employees may be required to work overtime.
- To minimize the impact of the potential additional overtime, consider: (a) limiting the amount of overtime worked (including by hiring more employees), or (b) setting the newly hourly pay rate at an amount that takes overtime pay into account.
- Consider policies or practices that may need to change regarding “working time” for reclassified employees (e.g., working from home or responding to work emails after hours).
- Consider how to communicate with select managers and employees who may be affected by the regulations and potential upcoming reclassification.
- In terms of messaging, it is important to convey your goal of keeping employees’ compensation the same. While you may need to adjust how you track their work and pay them, the intended result is for the employees to end up making the same amount that both the employees had expected and the business had budgeted.
Should you need assistance planning for and getting into compliance with the overtime changes, or would like to discuss any other employment issue facing your business, please feel free to contact Laura directly at email@example.com or 312-551-8300.