Employers Expect Overtime Rules to Decrease Workplace Flexibility Options, Worldatwork Survey Shows
The U.S. Department of Labor released the final rules updating the Fair Labor Standards Act of 1938 (FLSA) earlier this year. The rules, which are effective December 1, 2016, raise the standard salary level threshold for exemption to $47,476 per year. WorldatWork conducted a snapshot survey of how organizations are planning to implement these changes. According to the survey, 73 percent of respondents will comply with the new regulation through a combination of re-classification of some workers to nonexempt and increasing salaries above the new threshold for others. Half of employers, 49 percent, who plan to reclassify employees from exempt to nonexempt reported that workplace flexibility options for those employees will decrease.
“Once you dig deeper into the results, larger organizations, those that are more likely to have formalized workplace flexibility policies, will decrease workplace flexibility options at an even higher rate,” said Kerry Chou, CCP, senior practice leader at WorldatWork. Sixty two percent of employers with 10,000 to 39,999 reported that workplace flexibility options will decrease for employees reclassified to nonexempt.
The survey asked total rewards professionals when they intend to implement any changes in order to be in compliance with the new rules; 63 percent indicated that they are planning to wait until Dec. 1 or the pay period that includes the Dec. 1 deadline to make any changes. From 2010 to 2016, the number of organizations using bonuses increased from 59 percent to 81 percent, reflecting a shift in variable pay programs. Meanwhile, the number of employers using individual incentives (other than sales) dropped during the same time period, from 67 percent in 2010 to 39 percent in 2016.
“Employers are holding out hope that Congress will return after the elections and pass comprehensive legislation that will phase in the new overtime rules and eliminate the automatic updates,” said Melissa Sharp Murdock, WorldatWork senior manager of external affairs. “Lawmakers need to know that doubling the standard salary level this quickly is going to produce real consequences like the loss of workplace flexibility for a large number of workers.”
The survey also shows:
- 69 percent of employers said net costs did/will increase as a direct result of changes they are making to comply with the new standard salary level threshold.
- 16 percent of organizations with fewer than 500 employees will raise all salaries over the minimum salary threshold, while only 6 percent of organizations with 10,000-39,999 and 2 percent of organizations with 40,000 employees will raise all salaries.
Reposted with permission from Wolters Kluwer.
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