In May, the U.S. Department of Labor announced the final updates to the Fair Labor Standards Act overtime exemptions. These new regulations, scheduled to go into effect Dec. 1, will widen the amount of employees eligible for overtime pay by more than doubling the salary threshold that determines coverage. Furthermore, the total annual compensation requirement needed to meet the employee exemption will increase from $100,000 per year to $134,004.
Staffing agencies that have employees with salaries under the new threshold must take a course of action in order to avoid paying thousands in higher wages. According to an article in Small Business Trends, there are a few things employers can do to prepare for the new overtime rule.
- Become familiar with the rule changes and it’s direct impact on your business and overtime situation.
- Conduct an audit of the employees likely to be affected. Start with a basic review of current staff, exempt status, and compensation levels. Work with your accounting and HR teams to review payroll and identify exempt employees.
- Start tracking exempt employees’ hours for those who make below the new threshold. Also, make sure to track the time they spend working at home after hours since that will be compensable too.
- Determine whether you want to increase salary levels to maintain exempt status or transition employees to non-exempt status.
- Develop a plan and determine whether your costs will increase due to hours worked. For a better perspective, look at the impact of the new rules on your financial plan.
At World Wide Speciality Programs, our Employment Practices Liability claims have coverage that is designed to protect your staffing firm. We understand that you need protection from claims brought by an applicant or employee from allegations of discrimination, sexual harassment or wrongful termination. Our policies provide coverage to in-house and contract employees and are subject to the client’s workplace environment. For more information, call us today at 877.256.0468.