FLSA Compliance: Best Practices for FLSA Compliance with Kronos [Part 2]

Last week, we discussed how compliance is a major challenge for almost every employer. The recent modifications to the Fair Labor Standards Act have caused many organizations to see a spike in compliance risks. FLSA suits hit a record high in 2014, with over 1.3 Billion in back wages recovered. Organizations in all verticals have experienced wage and hour suits of upwards of 20 million dollars.

The Department of Labor expects 5 million employees to potentially be impacted starting in 2016.

The proposed rule is designed to update the salary and compensation levels for white-collar workers to be exempt. Changes will include:

• Setting the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers ($921 per week, or $47,892 annually).

• Increasing the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually).

• Establishing a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemptions.

The proposed standard salary level represents the most appropriate line between exempt and nonexempt employees because it minimizes the risk that employees legally entitled to overtime will be subject to mis-classification based on their salaries alone.

How can your Workforce Management System Assist with Compliance?

As new employees become potentially eligible for overtime pay, effective scheduling, labor tracking and time tracking are more important than ever.

• Consider the use of time collection devices for salaried employees.

• Consider greater integration between your HR, Payroll and Timekeeper software solutions.

• Consider the use of an integrated scheduling software such as Kronos Workforce Scheduler already utilizes time clocks, time stamp or Kronos Mobile options, expanding their use to salaried employees can provide greater transparency for worked time.

This will provide managers with access to worked hours, earnings, overtime and job description information so that they can proactively manage for compliance. This will also simplify reporting and record keeping to meet FLSA requirements. (WFS); the solution to controlling FLSA-mandated overtime for newly eligible employees is developing accurate schedules that meet projected resource needs and allow managers to predict when overtime will be required.

Improvizations’ Recommended Best Practices to comply with changing FLSA Requirements:

Proactive planning is the most powerful strategy in an organization’s toolbox when dealing with changing FLSA requirements. Overtime exemption for employees is based on:

1. Salary levels

2. An employee’s job duties

If your company is already utilizing a workforce management software solution to its fullest capacity, business process changes should still be considered:

• An organization should perform a full audit to identify those employees who will be effected by these new salary requirements; companies must first quantify the magnitude of organizational effect from these new legislative changes to develop the appropriate strategy to mediate potential impact. Some employees may require a reconsideration of their compensation packages. 

• Improvizations recommends that any organization have a developed business process for regularly reviewing job descriptions against actual actions performed – especially as the potential for more timely FLSA updates appears to be on the horizon. Using an HR tracking software like Kronos HR can be an integral part of automatically maintaining an organization’s job description portfolio.

• Improvizations further recommends that any organization review and improve its business process for maintaining accurate employee records for FLSA-related reporting.

Improvizations specializes in helping organizations achieve maximum ROI from their Kronos applications. Connect with us today to learn more about FLSA best practices and how your organization can best use your WFM application to achieve compliance.