Changes to the Fair Labor Standards Act's (FLSA) white collar exemptions could be coming later this spring, and those changes could have a big impact on how you classify your club's workforce.
Kara Maciel, the labor chair of Conn Maciel Carey PLLC's Employment Practice Group, shared insights on the potential impact to the health club business in a Club Industry webinar on Thursday. The free webinar, "Wage and Hour Mistakes Plus Solutions That Could Save Your Health Club Millions of Dollars," is now available for free for on-demand viewing.
In March, the U.S. Department of Labor forwarded its proposed modifications of the white collar exemptions to the Congressional Office of Management and Budget. This followed a public comment period that started in July 2015 that garnered more than 200,000 responses from various groups, according to a National Law Review report.
As proposed, the Department of Labor's final rule would more than double the minimum salary threshold for exempt status from $23,660 to $50,440 per year. The proposed regulations also call for an annual increase in the minimum salary threshold, and the DOL indicated it may revise the applicable duties test, Maciel noted in the webinar.
If the new rule as proposed is enacted, Maciel noted that many low-level managers and assistant managers may automatically be disqualified from exempt status unless their salaries are increased to meet the new salary minimum. This could lead to significant increases in labor costs for a health club business, Maciel said.
The final rule could come in May or June, and employers across the country will have time to adjust, Maciel said. Maciel shared three options for health club owners wanting to get ahead of the potential legislation:
- Audit the exempt classifications of the current workforce to ensure they meet the current requirements;
- Pay special attention to those who are close to the salary threshold and those who hold "assistant manager" or "supervisor" type positions;
- Review policies regarding overtime and hourly tracking systems as a result of the increased number of employees who will be entitled to overtime.
The proposed changes to the FLSA exemptions were not the only topic Maciel covered. She discussed trending state paid sick and family leave laws, and the increase in federal litigation in wage and hour lawsuits. The misclassification of trainers, working off the clock and not paying for all hours worked were among the topics covered in the wage and hour mistakes portion of the webinar.
"It (potential penalties) gets up into the millions of dollars very easily, and that is why this topic is so important and why we are doing this webinar," Maciel said.