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Preparing Your Self Storage Business for the New Overtime Ruling
Posted 3/24/2016
Author Olga Tua
 
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In July 6, 2015 the Department of Labor submitted a proposed ruling to update and revise the Fair Labor Standards Act (FLSA) to extend overtime protections to millions of Americans.

The Fair Labor Standards Act (FLSA) guarantees a minimum wage and overtime pay at of at least 1.5 times the self storage employee's regular rate for hours worked over 40 in a workweek. These protections extend to most employees; however, the FLSA contains many exemptions. In its recent proposed ruling, the Department of Labor (the DOL) is proposing to update the regulations issued under the FLSA implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. This exemption is commonly referred to as the “white collar exemption.” In order to fall under the exemption, self storage employees must meet certain tests related to their job duties and be paid on a salary basis at not less than a specific amount (depending on the exemption). The standard salary level required for exemption is currently $455 a week ($23,660 annually). In its proposed ruling, the DOL is proposing to update this salary level for exemption from minimum wage and overtime to ensure employees are compensated fairly.

More specifically, the DOL is proposing to increase the threshold for minimum salary from $455 per week (or $23,660 annually) to $970 per week (or $50,440 annually). It will also raise the highly compensated salary threshold from $100,000 to $122,148. As is relates to the tests related to job duties, there is still no final proposed ruling by the DOL. However, the DOL is interested in what changes, if any, should be made to the duties tests (stay tuned on developments with respect to job duties tests).

The proposed ruling can take effect as quickly as July 2016. According to recent statements from Tammy McCutchen, an attorney and former administrator of the DOL’s Wage and Hour Division, the ruling can be published on July 7, 2016 for an effective date of September 5, 2016 (Labor Day) or published on September 2, 2016 for an effective date of November 1, 2016 (prior to election day). This timeline considers the fact that the overtime ruling was sent to the Office of Management & Budget (OMB) on March 14, 2016, which has 90 days to review with an optional 30 day extension but does not have a minimum required timeframe to review.

Because of the massive effects this ruling can have on employers (it is projected to affect over millions of white collar workers within the first year of establishment), it is recommended that self storage employers understand the impacts of these changes to their organization and proactively establish best practices to address any potential risks that can surface once the rule takes effect. Below you will find a few initial steps to proactively tackle the proposed changes:

  1. Verify salary ranges for any current exempt employees you have that are within the determined threshold of salary;
  2. Decide if, for your self storage business, you will raise salaries to meet the new ruling minimum or if you need to adjust your workforce;
  3. Determine how will you calculate any changes in accordance to what you have defined as your workweek; and
  4. If you have employees that will be affected, decide on a communication strategy.

Although there has been recent opposition to this ruling and a bill was created to block this FLSA ruling, it seems very unlikely that this ruling will be overturned since parallel to this bill there are groups that are pushing for acceleration in the approval process. What we are sure of is that we need to keep ourselves, as employers, abreast of these up and coming changes to ensure we are maintaining compliance.

At AlphaStaff, we can assist you in navigating through complex HR topics. Managing the intricacies of minimum wage, overtime, and exempt vs. non-exempt issues can seem simple, but if mismanaged can lead to costly legal exposure. Through our certified Human Resources practitioners and skilled professionals, we are able to assist employers to minimize these types of exposures while still allowing the employers to make the decisions that make sense for their operations. At the end of the day, we do the heavy lifting by providing compliance guidance and allowing you to focus on your business. To find out how AlphaStaff can provide you with tools and services to educate you on employment practices that can affect your business, please feel free to reach out to our Vice President of Strategic Business Development, Jeniece Carter-Henson, at jhenson@alphastaff.com or at (727)365.6722.

NOTE: The information contained in this article is not legal advice or a substitute for legal counsel.

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