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05/19/2016

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Seek guidance on the FLSA changes from the writings of HR professional associations, such as SHRM and WorldatWork, and labor attorneys when in doubt.

A key provision of the ruling that I noticed at first glance is that they kept a modified version of the BLS 40th percentile salaried worker test. Instead of annual increases, they will happen every three years.

Most people who fall under the threshold will be converted to hourly-paid (that's what my Magic 8-ball confirms, anyway), and thereby fall out of the survey. Absent any further modification, we will see the virtual end of the white collar exemption in about 7 or so cycles, which was possibly the goal all along.

Bingo, Alex. As Scott notes, the 3-year inflator is tied to the 40th %ile ... "of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South." Considering the gradual weakening of the reliability of BLS OES and NCS surveys, the integrity of the threshold point may rest on shaky ground going forward, too.

Jim, I don't see where you are getting the "will grow 500%" number from. I followed the link and there was no reference. Please clarify. Thanks.

The percent of the workforce covered goes from 7% to 35%. See Secretary of Labors press release.

I'm with Margaret . . . didn't this mean to say that the eligible population would grow by half again as many (as currently)? I freely admit that I am bad at arithmetic though.

In answer to the somewhat rhetorical, "what have I missed" question - is the same point I've made a couple times in the past, and which harkens back to the true driver for the FLSA from when it was passed back in 1938. It was intended to make the payment of hourly wages beyond a certain hours worked threshold more prohibitively expensive - resulting in an expansion of the workforce to avoid those additional costs (the U.S. was still emerging from the throes of The Depression).

It strikes me that this change has a similar objective (and it's not to ensure that workers get paid more). It's to expand (hopefully) the U.S. workforce. Although as Jim points out, leveraging automation and technology further to avoid additional labor costs may be the relief valve most employers pursue, this time around.

Employees will be added and many will get paid more, it appears. Hopefully someone will study the effects to get a better breakdown. My opinion is that the latter effect was the main driver of the change.

W@W offers a basic math skills class for comp professionals. No offense intended.

Per cents can be career killer. Where do I sign up? No offense here.

Boris

My secret time bomb was not really intended to be an expert trap, truly! (Snicker ;-) I only wanted to avoid the redundancy of simply repeating the dull percentages reported in the DOL news release (as Donny accurately noted). A mere 35% doesn't sound like much until you realize the current status quo base figure is a tiny 7%. Relatives give everyone trouble (sincerely sic)!

Hope Donny is right about the positive long-term consequences, but I fear Chris's cynical view better reflects the usual economic behavioral reaction. Any fiduciary (officer, executive or board director) who fails to take appropriate actions to protect the investment of owners faces legal penalties. Governments run by elected politicians are happy to transfer costs to taxpayers; but someone has to pay the piper.

This new announcement today https://blog.dol.gov/2016/05/26/behind-the-myths-the-truth-about-overtime/ by DOL enlightens us all on how the new OT rule has been outrageously slandered. It further explains why the new regulation is wonderful for everyone.

Jim, after reading that sanctimonious, condescending piece of abject propaganda you linked, I was sorely tempted to enter my own pithy comment...but what would be the point? People like David Weil would just be further convinced that people like me who are amongst the great unwashed masses really are too stupid to know what's good for them.

At least the author did not characterize as "myth" the fact that the use of a salaried-only survey would cause an exponential increase in the salary threshold every three years.

Ah ... (grin) ... you obviously DID read that "paid political announcement" by the Harvard PhD. Dr. Weil is reportedly "internationally recognized" as an expert on labor policy. That probably reflects opinions deriving from the DC area and points North and East of there, since I must admit I'm not familiar with any of his practical labor relations work. Imagine he was eager to do SOMETHING, since his job no longer involves actually explaining the real-life application of FLSA regulations in Opinion Letters open for public clarification.

Thanks for the additional observation, Scott. Readers are reminded to again note Scott's prescient earlier comment at the top of this string. Suspect Dr. Weil omitted a dismissal of your warning about the impending demise of the administrative exemption because he completely avoided the topic. Only you have had the foresight to anticipate that outcome. Well warned is forearmed.

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