What are Other Employers Doing About the New Overtime/Exempt Rules?

by Carey Klosterman on November 7, 2016

in Compensation,Compliance,Questions

sleeping worker

With the impending Fair Labor Standards Act (FLSA) changes effective December 1, I regularly get the question “what are other employers doing?” Survey results from a recent study on the Implementation of New FLSA Rules conducted by WorldatWork of 948 U.S. employers nationwide are consistent with the conversations that I have been having locally.

Maintain Exemption or Reclassify

The percentage of exempt employees represented at responding organizations is actually quite low at only 10% of their total workforce. While responses vary by job, approximately 15% of respondents will raise employee salaries to the new threshold (maintaining exemption), 9% will reclassify employees to non-exempt, and 4% of respondents are still unsure of how to navigate the changes.

The remaining responses indicate that organizations will be doing a combination of raising to the new threshold to maintain the exemption status as well as reclassifying other employees.

Flexibility

Flexibility has been a growing concern with the FLSA changes both locally as well as nationwide. Survey results seem rather ambiguous, however, when focusing on the two options alone, yet seem to vary based on company size and industry. 50% of respondents report that flexibility options will remain the same for reclassified employees, and 49% report flexibility options will decrease for reclassified nonexempt employees.

Flexibility in the workplace has become a crucial benefit used to attract and retain top talent. If organizations are forced to reevaluate as well as decrease flex options, they may experience higher turnover as well as encounter greater difficulty recruiting for talent.

Cost Containment

Cost containment is a leading concern that organizations are faced with based on the new rules. The WorldatWork Survey results indicate that 69% of respondents have or will see an increase in net costs. 13% of respondents report that net costs will remain the same, 7% are taking cost containment measures to maintain net costs, and 11% are still unsure what the outcome will be. 55% of respondents will see no reduction of planned pay budget increases for the next fiscal year with 16% reporting that the changes will cause a reduction for a portion or for all of their workforce. This leaves 29% who are still unsure.

While some employers have taken action and have defined a direction to go, for a large percentage of employers, what action to take is clearly, unclear. The clock is ticking and December 1st will be here before we know it. If you are one of the lucky few who has a plan in place, kudos to you! However, for those of you who are uncertain, time is of the essence.

Cascade’s FLSA Resource Guide may be just what you have been waiting for, jam packed full of useful information to help you navigate this challenging issue. Let’s not forget the Frequently Asked Questions which are also included!

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