With Labor Day just past, it seems appropriate that we learn news of DOL’s ever controversial proposed changes to the Fair Labor Standards Act (FLSA). A federal judge in Texas struck down the overtime rule which has been on hold since November of last year. As employers everywhere clandestinely rejoice, it’s not for lack of compassion for their employees. At the crux of the controversy was the minimum annual salary threshold and this sent employers into a tailspin around this time last year.
After a few short days following the ruling, The Department of Labor just announced it will drop it’s appeal and accept the decision. Still, all indications point to a revised update to FLSA that many employers and industry associations will find far more reasonable. The need for the threshold to increase is important. Organizations such as IPMA-HR, CUPA-HR, and SHRM have all responded in support of overtime reform, but stopped short of getting behind a salary threshold increase of more than double.
A new Request for Information (RFI) has been issued by the Dept of Labor asking for input from employers and the community hopefully signaling a more agreeable change to a law that hasn’t been updated since 2004 for “white-collar” workers. The overturned rule is not an end to the discussion, but rather an opportunity for improvement.
Still confused about the status of the proposed overtime regulations? Well, you are not alone. Since the preliminary injunction on Nov 22nd, 2016, many employers are left wondering if they will ever need to implement the courses of action they had ready for December 1st. And this is one scenario where being prepared ahead of time was a disadvantage. In a recent SHRM article, What’s Next for Employers Under the FLSA Overtime Rule?, we learn more than half of the audience at a conference on employment law already moved forward with reclassification changes.
In the same SHRM article, Tammy McCutchen, former administrator of the DOL’s wage and hour division under President George W. Bush and a principal with Littler in Washington, D.C, talks about what she sees as the future of the regulation. She encourages the Department of Labor (DOL) to consider a “restart and redo”. This would include proposing a new rule with the opportunity for another comment period before the final ruling.
There are some general thoughts that the threshold was set too high, especially for parts of the country where cost of living is lower. More than doubling the existing threshold ($23,660 t0 $47,476) can put a drain on employers. McCutchen goes on to say in the article that she thinks a threshold of $35,000 is a better place to start. Most people agree an increase is needed, but a smaller step should be taken.
Unfortunately there is still more waiting we must do until we know which direction this regulation will take. In the meantime, keep those plans ready because you never know what will happen next.
Today’s guest blogger is Don Pagel, Vice President, Public Sector Services at Kronos.
“If you always do what you’ve always done, you’ll always get what you’ve always got.”
― Henry Ford
Henry Ford changed the world when he created an entirely new process to manufacture cars. The assembly line created new efficiencies in all areas of manufacturing and ushered in one of the most dramatic economic booms in human history. The fear of the workers was that this increase in efficiency would reduce the need for labor. What actually happened was that efficiency made the dream of car ownership within the grasp of the common man and the increase of purchasing power also increased labor demand.
Change is most difficult before the benefits of change are realized.
Implementations of workforce management technologies can often be feared because of the change it creates in the everyday life of both the employee and the manager. The employee often fears that the requirements of “punching a clock” can restrict their freedom until they experience the value of visibility and the importance of fairness of adhering to the Fair Labor Standards Act (FLSA). Managers fear being treated like a “timekeeper” until they realize the benefits of becoming true resource managers and the ease visibility gives them into controlling budgets and employee favoritism.
Fear of change can be overcome by increasing the across-the-board fairness that both a workforce management system can offer coupled with unifying policies to ensure both fairness as well as compliance with the Fair Labor Standards Act.
When implementing any new system, the temptation is to force the system to do “what you have always done”, thus eliminating the potential gains it can offer.
Public Sector Challenges with the FLSA
The Fair Labor Standards Act was signed by President Roosevelt in 1938 in response to ongoing employee abuses of the Great Depression. For decades after the passing of this important legislation, state and local governments were considered exempt from it. A number of important legal cases from the 1960’s through the 1980’s were brought before the US Supreme Court. Finally in 1985, Garcia vs. San Antonio Metropolitan Transit Authority  settled the issue when the court made adjustments in FLSA for compensatory time and the unique needs of peace officers. These changes finally held most government agencies accountable to the amended act.
Many government agencies today still struggle with being compliant with the FLSA. The concept of “Exception Pay” or “Pay from Schedule” is still the common practice. Because of this, the Department of Labor (DOL) has stepped up audits of government agencies due to increased complaints from employees and unions alike. The DOL has also created a tool for state and local government agencies to do a “self assessment”.
Implementing a workforce management system is a perfect opportunity for state and local governments to re-evaluate their policies and procedures to unify policy and ensure compliance with the FLSA. Missing this opportunity will only lead to increased struggles later to enact policies that protect both the employees and the employer. Using a best practice procedure of “Positive Pay” for all non-exempt employees ensures full compliance with the FLSA through accurate documentation of hours worked. This must also be backed up by policy in order to not only ensure fairness but also reduce challenges to civil service courts and union leadership.
 469 U.S. 528 (1985)