Steps to take ahead of possible DOL change in exempt salary qualifications

The Department of Labor may soon release proposed regulations raising the salary employees must earn to remain exempt from the Fair Labor Standards Act.

The current weekly salary is $684 a week or $35,568 a year. Highly compensated employees may be paid at least $107,432 a year, including $684 a week. It’s likely the increase won’t be prohibitive. Why: Final regulations issued in 2016 almost doubled the salary threshold and were thrown out by a federal court.

Let’s be clear—no one knows what these regulations will contain. Nevertheless, it’s prudent to proceed as if these regulations will see the light of day next month. With that in mind, here are the steps to start taking down.

Determine who will be impacted

First, look at the employees who would be on the bubble—your assistant and middle managers who are earning just above the $35,568 mark.

You have three options:

• Raise everyone’s salary. If the bump isn’t too great, you should be able to handle the raise.
• Reclassify everyone as nonexempt and pay them overtime when they work longer than 40 hours in a week.
• Raise the salary of some and reclassify others.

Add up OT hours

Not every exempt employee works lots of overtime hours a week, so it’s crucial to identify how many hours a week these employees work. It may pay to reclassify those who do work a lot of overtime.

Reason: If they’re working a lot of overtime, they may not, in fact, be exempt. You should evaluate whether these employees meet the FLSA’s duties test for their positions.

Key: For those who will be reclassified as nonexempt, your challenge will be to set their hourly pay rates.

Idea: If you lower their base rate of pay, you may be able to make up the difference by guaranteeing them overtime and bonuses.

Review job descriptions

You can use this time to conduct a job description survey of all employees. This isn’t an anonymous survey, so employees may be skittish about completing it. Based on our experience, they’re long surveys, which employees can’t just bang out in 30 minutes. Employees need to be thoughtful and thorough about describing what they do, and you need to give them the time to complete it properly.

You also need to reassure employees of the survey’s purpose: to collect meaningful information about the specific characteristics of everyone’s position. Tell them that managers will use job descriptions to assist in planning workflow, organization, and staffing.

Areas of inquiry should concentrate on these points:

• The essential tasks of employees’ jobs. Stick to key tasks—currently assigned and ongoing duties. Have employees explain what they do and why the job must be performed. For example, the essential functions of a payroll manager are to collect and validate employees’ time sheets, to forward documentation to the appropriate party for approval, and to process the payroll so everyone is paid correctly and on time. Employees should avoid reciting instructions on how they do their jobs.
• Employees’ level of responsibility. Employees should describe their supervisory responsibilities: how many employees they supervise, how much input they have into employees’ performance reviews, whether they have the authorization to hire and fire, etc. Employees should also describe how their decisions affect others.
• The problems/errors they encounter and how they solve them.
• Employees’ special knowledge, skills, or abilities the need to perform jobs. Degrees are relevant; subjective statements about a position’s occupant (e.g., Ashton works very hard) aren’t.