SAF members can contact attorney Paula Calimafde (Kal-i-MAF-da) for a free 15-minute consultation on the DOL’s new rule and other small business legal matters. She can be reached at (301) 951-9325. Be sure to mention your SAF membership.
A new rule issued by the U.S. Department of Labor doubles the threshold of workers currently eligible for overtime — and is expected to have serious implications for floral industry business owners.
“Almost a year after being released by the DOL, and despite receiving 293,394 comments, many of which were from employers and trade associations that expressed deep concern about the negative impacts it would have, the 508-page final rule is largely unchanged from what was initially proposed,” said Shawn McBurney, the Society of American Florists’ senior director of government relations.
The new rule goes into effect Dec. 1, 2016.
The rule increases the threshold of those who qualify for overtime from the current level of $23,660 per year ($455 per week) to $47,476 per year ($913 per week). The Obama Administration asserts that an additional 4.2 million workers will be eligible for overtime pay under the rule while others have estimated that up to 10 million more workers would be
“The rule does not take geographic differences into consideration,” noted McBurney. “ The pay level threshold in New York City is the same for New Albin, Iowa.”
Under the Fair Labor Standards Act (FLSA), a person must satisfy three criteria to qualify as exempt from receiving overtime pay: first, they must make a salary (as opposed to being paid by the hour or piece); second, that salary must be more than a certain amount (currently $23,660 per year); and third, their “primary duties” must be consistent with managerial, professional or administrative positions as defined by DOL.
In addition to doubling the level for qualifying for overtime, for the first time ever the rule will automatically increase every three years, beginning in 2020. Since its inception in 1938, that level has always been changed through formal procedures after consideration of those providing concerns. The rule puts those changes on autopilot with no requirement to consider input.
“Floral industry employers covered by the FLSA need to analyze employee classifications and make any necessary changes to comply with the new rule,” McBurney said. “A significant number of employees may need to be reclassified from exempt to nonexempt status. Employers should analyze the need to track hours worked and the resulting impact on workplace flexibility.”
Ross Eisenbrey, the vice president of the left-leaning Economic Policy Institute, which studied the effect of a higher overtime pay threshold, told the Los Angeles Times the new rule “will have a positive effect, a substantial positive effect on workers and part of that will mean a transfer of dollars from corporate profits and executive salaries to workers.”
Nationally, the industries with the largest share of workers impacted by the new federal threshold include agriculture, hospitality and construction, according to Eisenbrey’s analysis.
Some states such as California have wage and hour laws that are more restrictive than the FLSA. Employers in those states will need to review coverage requirements under federal law in light of these proposed changes.
DOL has provided additional information on the rule.
SAF members can contact attorney Paula Calimafde (Kal-i-MAF-da) for a free 15-minute consultation on this and other small business legal matters. She can be reached at (301) 951-9325. Be sure to mention your SAF membership.
