The U.S Department of Labor has proposed a new rule that would make over one million American workers eligible for overtime pay. While there is a long road ahead until the final ruling, employers should take steps to ensure they are prepared for this potential change. Employers should audit their exempt workforces to determine whether employees qualify for white-collar exemptions under the primary duties criteria under the three different exemptions:
Executive Exemption
An employee’s primary duties must be to manage the enterprise or a department or subdivision of the enterprise, and to regularly direct the work of at least two employees. The employee must have the authority to hire or terminate, or have some influence in the hiring, terminating, or changing status of other employees.
Administrative Exemption
The employee’s primary duty must be to perform office or non-manual work directly related to the management or general business operations of the employer or employee’s customers. The employee’s duties must include the exercise of discretion and independent judgment with respect to matters of significance.
Professional Exemption
For a professional exemption, the employee’s primary duty must be work requiring knowledge of an advanced type in a field of science or learning. This knowledge is customarily acquired by prolonged, specialized, intellectual instruction and study. Employees may also be a part of a few similarly highly specialized fields such as teaching, computer analytics, and engineering.
Employers do not have to wait for the final ruling to review the duties of their employees, and it’s possible that employees currently classified as exempt fail to meet the primary duties tests. So, it could be beneficial for employers to conduct audits of exempt status employees now, even for those who earn salaries that will not likely be impacted by the Department of Labor’s proposed rule. Conducting audits can help catch any errors that are currently unknown and can prevent future mistakes. Learn more about this proposed rule change from the U.S. Department of Labor and how employers and employees will be affected.
If you have any questions, please call DecisionHR at 1-888-828-5511 and ask to speak with your assigned Human Resources Business Partner.
