Firms often are oblivious to the law when it applies to them. And that’s not surprising given its intricacies, especially laws such as the Fair Labor Standards Act (FLSA), which determines who gets overtime and who doesn’t. On March 25, the U.S. Department of Labor (DOL) issued new regulations minimizing the first category and maximizing the second. While these still are just proposals, their adoption is a done deal since the Bush administration and businesses support them and the DOL can issue the regs as it sees fit. When adopted, we hopefully will end up with Power Point simplicity, instead of the current Rubik’s Cube complexity. What does this mean for firms?
Let’s start with a few basics. The presumption is that all employees receive overtime pay, unless they fall within one of three exemptions: executive, professional or administrative. The new regulations do not change this, nor do they change FLSA’s most drastic remedy: Owners or managers can be personally liable for unpaid overtime. But the regulations will provide firms with a chance to convert non-exempt employees to exempt, create job classifications that are exempt and revamp their salary structure.
