December 1st Might Be Too Late for FLSA Overtime Changes
Though the new FLSA overtime rules become effective on December 1st, which is a Thursday, that might not be the start of a new pay period for your business and could be a problem. For example, if you pay weekly or semi-weekly, December 1st may fall smack in the middle of your pay period instead. If that is the case, we strongly recommend you make the necessary changes in employee classifications and pay structures no later than the beginning of the payroll periods that includes December 1st.
Better yet, you may even want to consider making the changes an entire payroll period prior to that. This way employees who don’t understand their new pay stub will have an opportunity to ask you questions prior to the law going into effect. Having the extra few weeks to iron out any kinks and put employees’ minds at ease may help you prevent knee-jerk phone calls to the Department of Labor.
Did you know that the Fair Labor Standards Act was passed in 1938, at which time it set the federal minimum wage at 25 cents per hour. Since then, the federal minimum wage has increased 22 times, with varying real-dollar values (i.e. what the value would be in today’s dollars). These real-dollar values have ranged from $4.06, when the FLSA was passed, to $10.69 in 1968. The minimum wage was its most valuable—consistently worth more than $9 per hour—from 1963 until 1981. In 1938 the minimum salary for exempt employees was set at $30 per week. It has (of course) also changed over the years, though not nearly as frequently as the minimum wage. In fact, since the threshold was increased to $155 per week in 1975, we saw only one adjustment—29 years later in 2004. The 2004 change increased the minimum weekly salary nearly 200%, to $455 per week. This year’s 101% increase to $913 per week is therefore large, but not unprecedented.