Mark Neuberger on FLSA Overtime Exemption Salary Increase – 'Employers should institute guardrails'

Foley & Lardner LLP of counsel Mark Neuberger described how employers can prepare for the approaching second increase to the Fair Labor Standards Act’s salary level for overtime exemption in the Law360 article, “3 Tips To Manage Salary Level Increase Under FLSA Rule.”

Neuberger said employers should make a spreadsheet of their exempt employees who are close to or under the new salary threshold to begin evaluating next steps, noting that this process will be a recurring one given the new U.S. Department of Labor rule driving the change has automatic increases built in every three years beginning July 1, 2027.

“If I bring them up to the minimum this year on Jan. 1, what am I going to do next [time]?” he commented. “And how big is that jump going to be?”

Neuberger also emphasized the importance for employers to ensure that newly overtime eligible employees are aware of how to properly track their working hours, adding that employers should “institute guardrails” to monitor employee work hours and explain the practices they are expected to follow.

“It sounds easy to make them nonexempt and not let them work overtime,” Neuberger commented, but, “How do you control the hours they work when they’re in a managerial white-collar type position, and they’re looking at emails, they’re responding to text messages off hours? That becomes compensable working time.”

He said a particularly tricky area of the FLSA is how to compensate nonexempt workers when they are traveling for business.

“If you have a manager who’s exempt and you say, ‘OK, I’ll just make them nonexempt,’ and they travel, the rules are very complicated on when and how they have to be compensated,” Neuberger commented, highlighting a DOL fact sheet employers should review with guidance on how to address certain travel time.