New proposed FLSA regulations could be disruptive

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New proposed FLSA regulations could be disruptive

Proposed regulations for new white-collar exemptions to the Fair Labor Standards Act (“FLSA”) expected last month are still pending. These proposed regulations will change the test for exempt and non-exempt classifications for professional, administrative and executive employees.

Because proposed changes will have a potentially disruptive effect on business operations, employers should take the following steps before one minute from normal strikes:

  • Determine if current job descriptions accurately reflect job duties and describe the core functions and responsibilities of each job role.
  • Identify, under advice of counsel to maintain attorney-client privilege, currently exempt positions that may fall into the gray zone between exempt and nonexempt. These roles may present the most immediate concern if new regulations significantly narrow exemptions. This may include positions whose salary is toward the lower end of the exempt spectrum, as well as jobs where employees engage in large amounts of what can reasonably be considered nonexempt activity.
  • Initiate contingency plans for how your business will respond if the minimum salary threshold increases substantially to $40,000, $50,000 or even $60,000. If the salary threshold for exempt status increases sharply, your business may face a tough choice regarding whether to award employees an outsized raise in order to maintain exempt status or, instead, to convert roles to nonexempt status.
  • Determine your company’s approach to establishing work schedules and pay rates for employees converted from exempt to nonexempt status.
  • In the event of congressional pushback or litigation, rules may end up in limbo for several months. Moreover, you should expect a comment period, followed months later by what could be a final rule that may differ in substantive ways from the “notice of proposed rulemaking” version.
  • The potential for reclassifying a large number of employees from exempt to nonexempt status may require updating your compensation strategy to include alternative ways to motivate desired job behaviors, addressing potential benefits consequences and anticipating morale and other employee relations concerns.

Contact a KMRD Partners relationship manager to determine whether appropriate risks are transferred in your insurance program, and make sure the best possible value is achieved.
KMRD reduces the overall cost of risk for clients by producing a greater value for each insurance dollar spent, while utilizing an enterprise risk management approach to engineer the optimal solution. The firm’s diagnostic process is supported by its unique collaborative technology, KMRD XCHANGE ®

We are dedicated to anticipating risk and helping firms recover from unplanned events that wait on the other side of one minute from normal.

To identify and correct coverage and service gaps in your business insurance risk profiles contact us at before one minute from normal strikes.


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