The Cost of Missing the December 1st FLSA Deadline in Business and at Work

During a panel I moderated last month on the upcoming changes to the Fair Labor Standards Act (FLSA) on December 1, 2016 (most significantly, raising the minimum salary for exempt employees to $47,476 or $913 a week), I asked the two U.S. Department of Labor representatives on the panel what would happen if an employer (hypothetically speaking) did not raise an exempt employee’s salary to $913 a week – and the employee was effectively exempt in all other areas – title, duties exemption test, etc.?

Their answer was very simple – the penalty “time clock” would start effective December 1, 2016. And given the amount of publicity generated by U.S. DOL and the resultant extensive media coverage regarding the Federal exempt salary threshold increase effective December 1, 2016, employees have been well-informed about these changes, to the extent that U.S. DOL anticipates that employees will proactively report their employer’s noncompliance.  The cost of that noncompliance includes but is not limited to:

  • Back wages
  • Liquidated damages equal to the amount of back wages owed
  • Attorney’s fees and court costs
  • Injunction
  • Fines (up to $10,000 per violation)
  • Imprisonment.

As a follow-up question, I asked that if an employee was effectively exempt in all other areas, as above – and only their salary was below the new $913 a week threshold – would there be any penalty for converting that employee to nonexempt status before or on December 1, 2016, rather than raise their salary to $913 a week to keep the employee’s status exempt by December 1st?  The answer from U.S. DOL was short and sweet – effectively, no.

Employers:  how will you effectively (and compliantly) manage the potential cost of missing the December 1st FLSA deadline in business and at work?

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