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Policy Watch - Wage & Hour

The Fair Labor Standards Act (FLSA) of 1938 and the Family and Medical Leave Act (FMLA) of 1993 are the two primary federal statutes shaping workplace policies in this country. The U.S. Department of Labor’s (DOL) Wage and Hour Office enforces both FLSA and FMLA. Among other things, FLSA establishes the minimum wage, overtime pay and recordkeeping requirements for employees in the private sector and in federal, state and local governments. Under FLSA, employees are to be paid at a rate of at least one and a half times their regular rate for any hours worked in excess of 40 in one week, unless they have been classified as exempt under certain specific statutory categories or meet other requirements outlined in the regulations.

Under Section 541 of FLSA regulations, an employee may qualify as exempt from overtime requirements if he or she satisfies a “primary duties test” (performs specific job responsibilities under the executive, administrative, professional, computer and outside sales regulations), is paid on a salary basis (that is, salary does not fluctuate based on the hours that the individual works) and is paid above a salary threshold set by regulation. Under the current regulations, employees must be paid more than $455 per week ($23,660 per year) to satisfy the salary threshold for exemption. On May 18, 2016,  DOL issued final overtime regulations that increase the salary threshold to $913 per week, or $47,476 annually, increase the highly compensated employee level and impose automatic updates to the salary threshold every three years. 

In addition to FLSA, FMLA and the Federal Employees Flexible and Compressed Work Schedules Act of 1985 are federal statutes that generally shape workplace flexibility policies. Certain states, including California, Connecticut, New Jersey, Massachusetts, Vermont, and Rhode Island, have enacted statewide paid leave insurance programs and/or mandated paid leave statutes.  


Current Issues

The following specific issues are of particular concern to human resource executives and the organizations they serve:

  • Overtime Regulations: On March 13, 2014, President Barack Obama directed DOL, through a Presidential Memorandum, to “modernize and streamline” FLSA overtime regulations. On May 18, 2016, DOL issued a final overtime rule significantly increasing the salary threshold to $913 per week or $47,476 annually in addition to other changes. 
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  • Workplace FlexibilityWorkplace flexibility is a strategic business practice that determines when and how work is to be done. It helps organizations create a modern work environment that is responsive to demographic, economic and technological changes.
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