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Remaining Compliant with FLSA Updates
Presented by Tamara BrownfieldPresident, Atlas Compensation Partners
Moderated by Lyla Rozelle Customer Success Manager, Jazz
+
Compensation Brief:FLSA Overtime Final Rule
Tamara BrownfieldAtlas Compensation Partners, LLC
June 23, 2016
Presenter Biography
6/20/16 AtlasCompensationPartners,LLCConfidential
TamaraBrownfield§ PresidentandPrincipalConsultantofAtlasCompensation Partners,LLC
§ Nearly20yearsofexperience,fromanalysttoboardroom
§ Experienceinallareasofcompensation (globalbroad-based, salescompensation,andexecutive)
§ Industryexperience:financial,manufacturing, chemical,technology,education,andsoftware
§ Expertise:designandimplementationofcompensationphilosophy, globalbanding andsalarystructures,global incentiveplans,executivecompensationstructuresandprograms,andglobal rewardandrecognitionprograms
§ Compensationcertifications:WorldatWorkdesignationsofCertifiedCompensationProfessional (CCP),GlobalRemunerationProfessional (GRP),andCertifiedExecutiveCompensationProfessional (CECP)
§ Education:Bachelor’sofSciencedegreeinIndustrialManagementfromCarnegieMellonUniversity3
Agenda
6/20/16 AtlasCompensationPartners,LLCConfidential
§ Background
§ SummaryofFinalOvertimeRule
§ EmployerCompliance&Considerations
§ Appendix
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Background
6/20/16 AtlasCompensationPartners,LLCConfidential
§ InMarch2014,PresidentObamadirectedtheDepartmentofLabor(DOL)toupdateandmodernizetheFairLaborStandardsActof1938(FLSA)minimumwageandovertimepayprotections
§ TheDOLpublishedtheproposedruleinJune2015
§ ThefinalrulewasreleasedinMay2016withcompliancerequiredbyDecember1,2016
§ Thefinalruleupdatesthesalarylevelrequiredforexemption(the“standardsalarythreshold”)toensuretheintendedovertimeprotectionsarefullyimplementedandtosimplifytheidentificationofthoseeligibleforovertime
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Summary of Final Overtime Rule
6/20/16 AtlasCompensationPartners,LLCConfidential
§ Thestandardsalarylevelthresholdissetatthe40th percentileofweeklyearningsforfull-timesalariedworkersinthelowest-wageCensusregion(currentlytheSouth)
⎕ $47,476peryear($913perweek)*§ TheHighlyCompensatedEmployees(HCE)salarythresholdissetatthe90th
percentileoffull-timesalariedworkersnationally⎕ $134,004annually
§ Employersmayapplynon-discretionarybonusesandincentivepayments(commissions)upto10%ofthestandardthresholdlevel;paymentsmustbemadeonatleastaquarterlybasis
§ Nochangesweremadetothedutiestests
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*Exceptions:§ AmericanSamoa ~salarylevelthresholdupdatedto$767perweek(previously$380)§ MotionPictureIndustry~salary levelthresholdupdatedto$1397perweek(previously $695)§ ComputerProfessionals ~ifpaidhourly,thresholdis$27.63/hour
Summary of Final Overtime Rule
6/20/16 AtlasCompensationPartners,LLCConfidential
§ BeginningJanuary1,2020,boththestandardsalarylevelthresholdandtheHCEsalarythresholdwillautomaticallyupdateeverythreeyears
§ Thestandardsalarythresholdistiedtothe40thpercentileoffull- timesalariedworkersinthelowest-wageregion
§ TheHCEsalarythresholdistiedtothe90thpercentileoffull-timesalariedworkersnationally
§ TheDepartmentofLaborwillpostnewsalarylevels150daysinadvanceoftheireffectivedate (e.g.August1,2019forthefirstupdate)
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Summary of Final Overtime Rule
6/20/16 AtlasCompensationPartners,LLCConfidential 8
Component CurrentRule(2004-November 30,2016)
FinalRule(EffectiveDecember1,2016)
SalaryThresholdLevel $455/week $913/week40th percentileofweeklyearningsforfull-timesalariedworkersinthelowest-wageCensusregion(currentlythe
South)
HCEAnnualSalaryThresholdLevel
$100,000 $134,00490thpercentileoffull-timesalariedworkersnationally
AutomaticUpdate None Every3years
Bonuses Noprovisiontoincludenon-discretionarybonuses/incentives towardthestandardsalary
threshold level
Upto10%ofthestandardsalarythresholdcanbemade-upofnon-discretionary
bonuses/incentives paidatleastquarterly
DutiesTest VisittheWageandHourDivisionoftheDOL:
https://www.dol.gov/whd/
Nochanges
Employer Compliance & Considerations
6/20/16 AtlasCompensationPartners,LLCConfidential
§ EmployershaveuntilDecember1,2016tocomeintocompliance§ Stepstotake:
⎕ Identifyexemptemployeesbelow$47,476andHCEsbelow$134,004§ Includesalaryandnon-discretionarybonus/incentives(paidatleastquarterly)§ SeesampleworksheetinAppendix
⎕ Determineaction§ SeetableinAppendix
⎕ ReviewbudgetandHR/Payrollsystemsimplications⎕ Training,ifneeded
§ Recordingtimeworked§ Rulesaroundovertime,timeworked,timenotallowedtowork
⎕ Communication!§ Managercommunications§ Employeecommunications
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Employer Compliance & Considerations
6/20/16 AtlasCompensationPartners,LLCConfidential
§ Considerations§ Ifnewlynon-exemptrolehasexemptduties
⎕ Movedutiestoanotherroleorremainincurrentrole?
§ Paycompression
§ Salaryranges(minimumsbelowstandardthreshold?)
§ Addressthepotentialofhavingexemptandnon-exemptemployeesinthesamerole
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Appendix
6/20/16 AtlasCompensationPartners,LLCConfidential 11
Sample Worksheet
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Includeallcurrentexemptemployeesbelow$47,476 threshold
Title Grade/Band AnnualSalary
HourlyRate(Salarydividedby2080
hours)
Actual/EstimatedTypicalHoursWorked
inWorkweek
ExpectedCurrentBonus/Incentive(if
applicable)
ExpectedBonus/IncentiveafterRe-classorChangeinSalary(maynotbeabletodetermineyet)
$AmountBelowNewThreshold
#ofHoursWorkedover40inaWorkweek(0ifwork
lessthan40)
Withthisinformation, youcanthencalculate:§ Currentweeklysalaryrate,includingnon-discretionary quarterlybonus, anddeterminetheamountbelow
thenewthreshold§ Weeklysalaryrate,includingnon-discretionary quarterlybonus, afterre-classificationorsalarychange§ Potentialimpactofovertimepaidifmoving fromexempttonon-exempt
Some Alternatives
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AlternativeResultinginIncreasedLaborCosts AlternativesResulting inNoChangetoLaborCosts
Adjust salariesup tothenewstandardthreshold level Reclassifytonon-exemptwithoutpayreductionbutlimithoursper weekto40;noadditional staff
Reclassifyto non-exemptwithoutpayreductionordecreaseinhours
Reclassifytonon-exempt, reducepaytooffsetovertime
Reclassifytonon-exemptwithoutpayreduction butlimithoursperweekto40;addtostaff
Adjust salariesup tonew standardthreshold tomaintainexemption;cutstafftooffsetcosts
Reduceoreliminatebonus/incentive eligibility tooffsetcosts
Remember:Inaddition tomeetingthestandardsalarythreshold, forajobtobeclassified asexempt,itmustalsomeettherequirementsoftheexemptdutiestest
Contact
6/20/16 AtlasCompensationPartners,LLCConfidential
Needhelpwithyourcompensationphilosophy,programdesign,competitivemarketanalysis,compensationcompliance,orjustwanttolearnmore?
TamaraBrownfield,CCP,GRP,CECPPresidentandPrincipalConsultantAtlasCompensationPartners,LLCwww.atlascompensation.comtamara@atlascompensation.com412-735-5492
Thankyou!
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6/20/16 AtlasCompensationPartners,LLCConfidential
AtlasCompensationPartners,LLC(“Atlas”)isaglobalandexecutivecompensationconsulting firmfocusingonpartnering withitsclientstodesignandbuildeffectivecompensationprograms.Ledbyitsfounder,TamaraBrownfield,Atlasworksasanextensionofyour teamthroughout thefullprocessofdeveloping aphilosophy, designing programs,andprogramimplementation. Atlaswillpartnerwithyou todesigneffectiveexecutiveandemployeecompensationprogramstoretain,engage,attract,andrewardyourteams.
TamaraBrownfield,CCP,GRP,CECP,PresidentandPrincipalConsultant,hasexperience,knowledge, andexpertiseinareasofglobalcompensation, salescompensation,andexecutivecompensation inavarietyofindustries including financial,manufacturing, chemical,technology,education,andsoftware.Hernearly20yearsofexperience,fromanalysttoBoardroom, includedesignandimplementation of:compensationphilosophy, globalbandingandsalarystructures,global incentiveplans,executivecompensationstructuresandprograms,andglobal rewardandrecognition programs.
TamarahasearnedWorldatWorkdesignations ofCertifiedCompensationProfessional (CCP),GlobalRemunerationProfessional (GRP),andCertifiedExecutiveCompensationProfessional (CECP).TamaraholdsaBachelor’sofSciencedegreeinIndustrialManagementfromCarnegieMellonUniversity.
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