SEEKING TO DELAY
The DOL's new rule on overtime will go into effect December 1, 2016. However, the House recently passed legislation that seeks to delay the effective date of the new rule until June 2017.

STEPPING FORWARD
While this is a great step forward, this legislation still must pass in the Senate. There is not much time for the Senate to get the legislation passed before December 1st. This is because Congress has adjourned until after the election. The Senate will essentially have 6 voting days to get this legislation passed. The likelihood of it passing in that short amount of time isn't great, but there is always a possibility.

OUR ADVICE
Plan for the new rule to be effective as of December 1, 2016.



Read an overview of the new Overtime Rule...


As you know, the new overtime rules are due to go into effect December 1. There are now less than 100 days before retailers must be compliant with the new rules.

Congress has two options of legislation to provide relief from the rule: S. 2707/H.R. 4773, the Protecting Workplace Advancement and Opportunity Act, which would hit pause€ on the rule; or H.R. 5813, the Overtime Reform and Enhancement Act, which would phase in the salary increase.

Congress has not heard nearly enough from retailers, small businesses, non-profits, and universities about the challenges of this rule and the unions are expected to be very active after Labor Day touting the benefits of the new rule.

We know many of you have reached out already and we are asking that you do so again on the very important issue. For an alert to help you reach out to your representative in Congress, click here.


View upcoming seminars on the DOL's new overtime rules, click here.
The Virginia Retail Federation invites Governor McAuliffe, Lieutenant Governor Northam, Attorney General Herring, Governor's Cabinet Members, Legislators and their aides to connect with Virginia retailers and the business community.

More Info & Registration >>


alt

What is this €œOvertime€ Rule, you ask?

For your reading pleasure, we've taken the liberty of breaking down the good, the bad, and the ugly.

First, let'€™s bring everyone up to speed.

In 2014, a Presidential Memorandum directed the Department of Labor (DOL) to update and modernize the regulations defining which white collar workers are protected by minimum wage and overtime standards under the Fair Labor Standards Act (FLSA).1

Subsequently, in an effort to put more money into the pockets of those deemed middle-class workers€ and improve the work-life balance of employees, the DOL issued its final rule making changes to the FLSA'€™s overtime exemptions. Through this, the DOL not only seeks to update regulations but also ensure full implementation of FLSA overtime protections and simplify the identification of overtime-eligible workers. The end goal is to make exemption easier for employers and workers to understand and apply.2

So, what exactly do these new regulations entail? Here is a quick breakdown.

The Final Rule primarily focuses on updating the salary and compensation levels needed for employees to be exempt. One of its biggest components is that minimum salary requirements for exempt employees will more than double the previous salary threshold level.

To be more specific, the standard salary threshold for full-time, salaried employees is being increased from$455/week ($23,660 per year) to $913/week ($47,476 per year).3

But that's not all

In an attempt to prevent the salary levels from becoming outdated again and ensure that a certain percentage of full-time salaried workers always qualify for overtime, the salary threshold will automatically increase every three years based on wage growth over time.

FUN FACT: These changes will not allow the government to take into account economic conditions, geographic cost-of-living differences or specific impacts on certain industries.4

The final overtime rule also increases the annual compensation threshold for €œHighly Compensated Employees€ (HCE) from $100,000 per year to $134,004 per year. This threshold equals the 90th percentile of full-time salaried workers nationally and will also be increased every three years.

€œFUN€ FACT: The projected HCE total compensation requirement as of January 1, 2020, will equal $147,524.5

Additionally, for the first time ever, a salaried employee'€™s bonuses and commissions can satisfy up to ten percent (10%) of the minimum threshold for overtime exemption. The catch? These incentive payments must be non-discretionary and paid on a quarterly or more frequent basis.

€œFUN€ FACT: As soon as these changes take effect, each quarter end will fall on a Friday, Saturday or Sunday, good grief.

On a more positive note for retailers, the duties test, one of the three criteria an employee must meet in order to be exempt, will remain unchanged.4

That'€™s a lot to take in. When will these changes go into effect?

Ready or not, the deadline for these new regulations is December 1, 2016. Automatic updates to the standard salary level and HCE total compensation requirement thresholds will occur every three years, beginning on January 1, 2020.

As an employer, what are my options moving forward?

Recognizing that each circumstance will be unique, the DOL suggests various ways employers can adjust to the updated salary level. They encourage employers to choose one, or some combination, of the following options:

- Increase salaries to (at least) the new threshold and retain any affected employee'€™s exemption status

- Pay overtime (i.e., time and a half) in addition to an employee'€™s current salary when necessary

- Evaluate an employee'€™s workload and realign their hours to 40/week to help reduce or eliminate overtime worked6

The outcome? Regardless of the action taken, this will ultimately change how you run your business.

Overtime expansion poses many challenges for the retail industry if these changes are allowed to take effect. Various concerns among employers include, but are not limited to: communication and morale issues, administrative burdens, regulatory risks, and a lack of opportunity to succeed in the workplace. The National Retail Federation (NRF) argues that the implementation of these rules would add to employers'€™ costs, undermine customer service, hinder productivity, generate more litigation opportunities for trial lawyers and ultimately harm job creation.7

The take awayàfor retailers? The time to act is now.

Simply put, congressional action is now the only way to stop these changes before they go into effect. Congress must pass the Protecting Workplace Advancement and Opportunity Act (S. 2707 and H.R. 4773), which would nullify this rule and require DOL to perform an economic analysis of how changes to overtime regulations will impact nonprofits, small businesses, and employers in other vulnerable industry sectors before issuing a new rule. The bill would also prohibit future proposals from including any automatic update mechanism.

Visit NRF's Action Center [online at NRF.com/Advocacy/Action-Center] to quickly and easily send an email to your members of Congress to ask that they cosponsor this important workplace legislation.€4

In the meantime, looking for more information?

We know the questions don'€™t end here. Be sure to utilize the many resources available on NRF.com to help prepare your business for the impact of these regulation changes. Remember, as a VRF and RMA member you have free access to these items. Additionally, the VRF team is available for any lingering questions and stay tuned for more information coming from RMA about an Overtime Rule workshop.

¹ Presidential Memorandum €” Updating and Modernizing Overtime Regulations | whitehouse.gov. (n.d.). Retrieved from https://www.whitehouse.gov/the-press-office/2014/03/13/presidential-memorandum-updating-and-modernizing-overtime-regulations

Questions and Answers€“ U.S. Department of Labor &€“ Wage and Hour Division (WHD). (n.d.). Retrieved from https://www.dol.gov/whd/overtime/final2016/faq.htm

Overtime for White Collar Workers: Overview and Summary of Final Rule. (2016). Retrieved from United States Department of Labor website: https://www.dol.gov/sites/default/files/overtime-overview.pdf

7 Things to Know about the New Overtime Regulations. (2016, June 14). Retrieved from https://nrf.com/advocacy/policy-agenda/overtime

National Retail Federation. (2016, June 8). NRF Webinar: DOL Overtime Rules &“ Practical Guidance for Retailers/Restaurants. Retrieved from https://nrf.com/events/nrf-dol-overtime-webinar-june-2016

The United State Department of Labor. (n.d.). Plenty of Options with New Overtime Rule : U.S. Department of Labor Blog [Blog Post]. Retrieved from https://blog.dol.gov/2016/05/18/plenty-of-options-with-new-overtime-rule/

7National Retail Federation. (2016). Overtime. Retrieved from https://nrf.com/advocacy/policy-agenda/overtime