CHANGES
The U.S. Department of Labor recently announced revisions to the federal regulations implementing the Fair Labor Standards Act (FLSA). The revisions took affect on August 23, 2004. Employers are urged to re-examine and revise certain employment policies to comply with these changes to the federal wage-hour law rules.
The FLSA is the Federal wage-hour law that defines minimum wage, overtime pay child labor and worker time recording standards for employers. Under the law, certain jobs are exempt from the minimum wage and overtime pay requirements. The exempted jobs affect employees in executive, administrative, professional, outside sales and certain computer related jobs. One affect of this law is that many jobs are paid on an hourly basis while the exempt jobs are paid on a salaried basis.
The revised regulations updated definitions of the exempted jobs that were originally defined in 1938. One significant change to the regulation is referred to as the Salary Basis Test. Now, to qualify for exemption , an employee must be paid on a salaried basis not less than $455.00 per week, or at least $27.63 per hour for computer specialists who perform analytical or development or design work or other tasks requiring comparable skill.
The terms salary basis means that there is no change in an individual's weekly pay because of quality, quantity or hours worked.
The new wage-hour rules specify certain circumstances in which an employer may make deductions from a salaried employee's pay. These allowable deductions now include:
Wage-Hour Rule
Administrative, professional and computer employees may now be paid on a "fee" basis. A fee arrangement is a predetermined pay amount for a specified or unique job rather than a series of periodic payments. The fee amount should be equivalent to $455.00 per week or greater to qualify for exemption. Employer Action Urged
Employers are encouraged to review the exempt/non-exempt or salaried/hourly status of jobs in light of the new rules. An examination of job duties is recommended rather than mere reliance on job titles alone.
Labor law authorities suggest that a recent revision to the Illinois Minimum Wage Act has the effect of "freezing" the definitions for exempt and non-exempt jobs in Illinois to coincide with definitions existing prior to 2003, but permitting the $455.00 salary test described earlier in this article.
However, human resources specialists recommend that an examination of exempt/non-exempt job status still be conducted to catch and correct any previous errors in classifying non-exempt jobs to a salaried status.
An examination of certain personnel policies is also recommended. Policies related to absences, pay for time off and discipline may need revision to comply with or take advantage of new features in the revised regulation.
Only brief highlights of the revised regulation are discussed here. A full copy of the regulation, identified as 29 CFR 541, is available from www.dol.gov. A free copy of the Fair Pay Fact Sheet is available on request by fax from 630-513-8237, or by e-mail from wshubbartt@hubbartt.com.
William S. Hubbartt is president of Hubbartt & Associates, a St. Charles, IL consulting firm specializing in employee compensation, employee handbooks, personnel policies and supervisory training.
Mr. Hubbartt is author "The Medical Privacy Rule - A Guide for Employers and Health Care Providers." www.Hubbartt.com
