Recently I had a chance to interview Jennifer Brown, the founder of PeopleTactics LLC, www.peopletactics.com. She works with small businesses in order to help them build stronger employee relationships, understand and comply with employment laws, establish policies, and set up easy-to-use HR systems to consistently avoid problems.

I interviewed Jennifer about the changes to the Fair Labor Standards Act (FLSA) and what people need to know. This is important for legal reasons and from a financial standpoint because it can impact profitability by impacting indirect rates or labor costs, particularly on Firm Fixed Price Contracts.

Karen: For people who are unfamiliar, can you provide some background on FLSA?

Jennifer: The misclassification of employees (exempt versus non-exempt) per the Fair Labor Standards Act (FLSA) is one of the most common (and costly) errors employers make when it comes to federal and state employment laws. The financial consequences of FLSA violations can be steep and include fines, interest, attorney fees, and possible criminal sanctions.

Karen: What changes are coming?

Jennifer: In recent news, The Department of Labor (DOL) released its final regulations making changes to overtime exemptions under the Fair Labor Standards Act, which go into effect December 1, 2016. In short, these changes include an increase in the annual salary threshold from $23,660 ($455/week) to $47,476 ($913/week). This doubles the current salary threshold level, making some employees -- even managers and professionals -- that are currently classified as exempt now eligible for overtime pay. In addition, this change includes automatic salary threshold increases every 3 years.

Karen: What advice do you have for people?

Jennifer: Education and preparation are key to both determining the impact these changes may have on your organization and creating a successful strategy to remain compliant, keep your employees happy, and keep your bottom line healthy. Employers should begin the process of reviewing their current workforce immediately to determine which employees are affected by the new overtime standards, whether to re-classify those employees, and determine a communications strategy for their workforce.

Karen: Can you provide some factors that employers should consider?

Jennifer:

• Make sure your job descriptions are up-to-date and accurately reflect the job duties and core responsibilities of each position.
• Identify those employees/positions that are currently exempt, but may be classified differently under the new guidelines.
• Keep your management teams informed. Make sure they have an understanding of the new FLSA regulations so they aren’t caught off guard if you are required to reclassify some employees from exempt to non-exempt.
• Determine the impact on your organization and develop a strategy to remain compliant (e.g., raise salaries for some employees to maintain exempt status, change some employees to non-exempt and make them overtime eligible, reduce work schedules, add more employees to cover the workload, etc.)

• For additional details on the new overtime regulations, please visit the Department of Labor’s website.

Karen: What is your best advice?

Jennifer: Be proactive. Don’t be caught scrambling at the last minute to evaluate the impact these changes will have on your business and employees.

If you have additional questions for Jennifer, she can be reached at jen@peopletactics.com and www.peopletactics.com.

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