Manufacturing & Distribution Client Alert

New Labor Rules Make It More Expensive to Do Business

Thanks to the U.S. Department of Labor, Wage and Hour Divisions new rule published in May 2016, millions of formerly exempt employees will now be eligible for overtime pay. Currently, businesses may classify as exempt from overtime workers who perform certain administrative, professional and executive duties at a salary of at least $455 per week, or $23,660 per year. Effective December 1, 2016, that threshold will more than double to $913 per week, or $47,476 annually. For employees whose salary falls short of the new threshold, business will have to decide how to comply with the new law either by classifying these employees as non-exempt and overtime eligible or raising their salaries to meet the new threshold.

In addition, for the first time in 25 years, OSHA (Occupational Safety and Health Administration) penalties are increasing. OSHAs maximum penalties will increase by a whopping 78% effective August 1, 2016. The long-standing maximum penalty amounts of $7,000 for a serious violation and $70,000 for a repeat or willful violation will jump to a maximum of $12,471 per serious violation and $124,709 per violation, respectively. With these increased penalties in mind, employers may wish to engage Kaufman & Canoles to perform an internal OSHA/VOSH compliance audit. This attorney-client privileged process leads to an audit report informing the employer of actions needed to assure compliance.

Both the changes to the FLSA salary threshold and increased OSHA penalties will be addressed at the upcoming 33rd Annual Employment Law Update to be held in Virginia Beach on November 17, 2016. Practical compliance advice will be provided to help businesses avoid the substantial liability that could result if an employer is audited by the Department of Labor or sued directly by current or former employees.