Astron Road Show

August 23, 2004, the date that the new Fair Labor Standards Act (FLSA) overtime regulations go into effect, is quickly approaching.  Employers must ensure that their company is compliant with the new regulations by taking the correct measures to determine which of their employees are exempt and which are non-exempt.  This includes reviewing and compiling clear and concise job descriptions prior to the daunting task of reclassification of employees. 

The latest FLSA regulations bring a whole new set of challenges for employers.  Under the new regulations, employees making under $23,660 a year are considered non-exempt.  Reclassification will require employers to not only closely review their employees’ job descriptions, responsibilities, and salary levels, but also communicate the reasons for reclassification to employees and manage the emotional and budgetary consequences. 

According to an example in the SHRM article, “Now’s the Time to Prepare for Pending FLSA Changes,”  if an employer has not been paying overtime to managers or supervisors who make less than that, the employer will have to either raise their salaries to the required minimum, reclassify them as non-exempt and pay them overtime, or assign work that would exceed 40 hours a week to another employee.

In addition, in the WorldatWork article, “They’re Here…Where Are You?  Overtime Overhauled,”  the key battle line will be drawn in the interpretation of the rules in terms of “Primary Duty”, “Customarily and Regularly Directing the Work of Others”, “Directly and Closely Related Tasks”, “Consistent Exercise of Discretion and Judgment”, and “Knowledge of an Advanced Type,” all of which must be documented and justified in an updated job description.

Communication is key when explaining the need to reclassify employee positions.  Previously exempt employees who are reclassified as non-exempt may be pleased to be receiving overtime benefits, but may feel that, in a way, they have been demoted.  Likewise, non-exempt employees who are reclassified as exempt may be concerned with the loss of their overtime pay.  Employers must take steps to focus on the morale and retention of all employees after implementing any changes.   

Job descriptions are necessary in demonstrating compliance to the new FLSA regulations.  FLSA regulations ensure that employers provide equal pay for equal work.  Job descriptions are a way to document the distinctions in job responsibilities between employees, justify unequal salaries, and determine exempt or non-exempt positions.  Many job descriptions include duties, skills, responsibilities, environmental and working conditions, required education and experience, as well as other job details.  Accurate job descriptions enable companies to remain compliant with the law.      

Those who do not take the time to update their job descriptions may be in for a rude awakening.  FLSA non-compliance can be extremely costly to employers.  The Department of Labor (DOL) has estimated that one-half of employers have incorrectly classified employees under the FLSA. In each of these cases, only one employee complaint to the DOL concerning overtime is required to open an investigation of the entire company's classification methods.  It is imperative that employers begin auditing their organizations now, before they face a possible DOL audit or expensive lawsuit in the future.

An excellent free resource to all on the latest FLSA changes can be found by clicking here. This site includes a detailed analysis of the changes along with a PowerPoint presentation that can be used in communicating changes to employees and managers.

Are your job descriptions up to speed? Be sure to vote in this week's on-line poll!!