Economic Impact of New FLSA Regulations By: Larry G. Michel - - PowerPoint PPT Presentation

Economic Impact of New FLSA Regulations

By: Larry G. Michel lmichel@kenberk.com KENNEDY BERKLEY YARNEVICH & WILLIAMSON, CHARTERED 119 West Iron Avenue, 7th Floor, P.O. Box 2567 Salina, KS 67402-2567 (785) 825-4674

Wage and Hour Law

• New Regulations governing white

collar exemptions

• Effective December 1, 2016

Proposed Regulations

• Published July 6, 2015
• Directed by President Obama
• Not updated since 2004
• Current salary threshold below

poverty limit for family of 4

Minimum Wage and Overtime

• Regulated by the Fair Labors Standard Act

(“FLSA”) – 29 U.S.C. § § 201, et seq.

• Covers more than 130 million American

workers

Coverage

• Enterprise coverage: Must have at leave

two employees and meet one of the following two requirements:

• Business volume of at least $500,000.00 or
• Be a hospital, school, government agency or
• ther such entity

Coverage

• Individual coverage:
• Engage in interstate commerce; or
• Domestic service workers

Coverage

• Individual coverage if engaged in

interstate commerce or production

• f goods
• interstate phone calls
• shipping materials
• Isolated occasions or insubstantial

amount of time will not usually result in claim

Coverage

• Volunteers generally exempt

unless commercial activity (i.e., gift shop)

• Employee may not volunteer to do

same type of services as they are employed to provide

Minimum Wage

All covered employees must be paid minimum wage for all hours worked

– $7.25 per hour since July 24, 2009

Overtime Pay Requirements

• Unless exempt an employee must

generally receive overtime pay for hours worked in excess of 40 in a given work week

• Overtime calculated at one and one-half

times the regular rate of pay

Overtime Pay Requirements

• No limit on number of hours an

employee may work

• Employer is not required to pay
• vertime for work on Saturday,

Sundays or Holidays so long as total hours in work week do not exceed 40

White Collar Exceptions to Overtime

• 1. Executive exemption;
• 2. Administrative exemption;
• 3. Professional exemption, including learned

professionals and creative professionals;

• 4. Computer employee exemption;
• 5. Outside sales exemption; and
• 6. Highly compensated employees

Salary Basis

Current

• At least $455 per week
• Predetermined amount each pay

period

• Cannot be reduced due to quality
• r quantity of work
• Limited reasons for deductions

Salary Basis

Effective December 1, 2016

• Salary must be at least $913 per

week or $47,476 per year.

• Updated every 3 years.
• 40% Percentile of full-time salaried

workers.

Economic Impact on Employers

Department of Labor Analysis

• Direct Costs
• Transfers
• Deadweight Loss

Direct Cost to Employers

DOL: Estimates $295.1 Million per Year

• Regulatory Familiarization
• Adjustment Costs
• Managerial Costs

Transfers

Income from Employers to Employees in the Form of Higher Earnings

• $1.19 Billion per year

Deadweight Loss

• $9.2 Million per year
• Small in Comparison to Total Costs

Next Steps for Employers

• Are they covered?
• 40 hour employees at $913 per

week equivalent to approximately $22.83 per hour

• Switch to hourly pay?
• No Overtime?

Questions?

Thank you!