Some months ago, Ceterus provided a quick overview of the new Fair Labor Standards Act (FLSA) and its impact on small, entrepreneurial businesses.
A Brief Recap
- The FLSA raises the threshold for employees eligible for overtime pay to $47,476/year or $913/week. This means the government does not require employers to pay overtime to an employee if their W-2 meets or exceeds this amount by year-end. This can be a bonus, capped at 10% of the threshold.
- The overtime hours threshold remains at anything over 40 hours/week (1.5x normal pay).
- The FLSA maintains the old “duties test” for employees considered “exempt” in addition to the new thresholds above (exercise of discretion and independent judgement). Generally, a business is not subject to these thresholds if it has less than $500,000/year in gross volume of sales.
- However, individual employees at exempt businesses can still be subject to FLSA if they engage in interstate commerce, defined very broadly.
Now the December 1 implementation date has come and gone, and the new rules are not in effect.
So, what happened?
In short, a federal judge in Texas placed a preliminary injunction on the implementation of the new rules at the request of several state Attorneys General. Most recently, the U.S. Department of Labor filed an appeal to this injunction in the hopes that it would be lifted and the law could be implemented immediately. The timing of all of this is extremely uncertain. Further complicating the issue, President-Elect Trump hinted at possibly overturning the new rule in January.
What’s a business owner to do?
First, keep your plans in place for eventual implementation. It could come at anytime. Having your budgets, time-tracking system, and operational plans ready will be helpful if that happens. It’s always better to prepare for laws like this so that they don’t take you by surprise.
Second, if you’ve made any salary or other changes in preparation for the new rules, do not change them back. Obviously salary changes are difficult to take back, but other operational changes can also result in employee discontent.
Last, keep an eye on the news, be ready and keep your employees up to date as well.