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Wisconsin Surgery Centers and the New FLSA Overtime Regulations

Association of Wisconsin Surgery Centers, Inc. (WSCA)
July 20, 2016

This article was written by Tom O'Day and published by the Association of Wisconsin Surgery Centers, Inc. (WSCA). The article can be read in it's entirety here.

The long-anticipated overtime compensation regulations were made public on May 18, 2016, and will go into effect on December 1, 2016. The new regulations significantly alter the salary threshold under which white-collar employees are exempt from overtime compensation requirements under the Fair Labor Standards Act. The new regulations did not, however, change the “duties” tests that are common to the learned professional, administrative or executive exemptions from overtime compensation. Because the duties tests were not changed, surgery centers can focus on the salary paid to its employees to determine if changes are necessary as of December 1, 2016.

The final rule will raise the salary threshold from $455 per week ($23,660 for a full-year worker) to $913 per week ($47,476 for a full-year worker). Although the final salary threshold for the white collar exemptions is lower than originally proposed ($970 per week), the new threshold more than doubles the minimum salary currently guaranteed to most exempt employees. The new rule also raises the salary threshold on the highly compensated employee exemption to $134,004 per year. The U.S. Department of Labor will revise (presumably increase) the salary thresholds every three years.

As an initial step, surgery centers must determine which currently-exempt employees earn a salary between $23,660 and $47,476. Once those employees are identified, the surgery center can either plan to increase their salary to meet the new salary threshold, or plan to convert that employee into a non-exempt employee starting December 1, 2016.

After identifying the employees that will be converted from exempt to non-exempt as of December 1, 2016, surgery centers should prepare a training and communication plan to ensure proper adherence to overtime laws.

Wage and hour litigation, whether based on overtime compensation, minimum wage or a failure to pay wages, has been increasing. With all of the attention that has been and will be given to the new overtime regulations, litigation is sure to increase. With a proper training and communication plan, surgery centers can best protect the organization against unnecessary litigation and establish a solid defense should such litigation commence.

Attentive employers will take steps to train their newly non-exempt employees, as well as those employees’ managers, to make sure that proper steps are taken to ensure a smooth transition to non-exempt status. Employees must be trained to record all hours worked. A previously exempt employee may have been used to working through lunch, checking e-mails late at night and coming in late to finish that project, even though it meant extra hours worked that week. As a non-exempt employee, that individual would likely be entitled to compensation for all of those activities. With proper management, surgery centers can manage newly non-exempt employees’ time to ensure that the employee is compensated appropriately and the surgery center is not burdened with unexpected overtime costs.

Newly non-exempt employees and their managers must be trained on managing off-the-clock work. A non-exempt employee must record all of his or her hours worked. For example, if the newly non-exempt employee does work through his lunch hour, that employee must record those hours worked. A trained manager will know to ensure that time is recorded, and can be trained to manage that employee’s time to avoid overtime compensation by ensuring the employee took time away from work later that week to ensure no overtime compensation is due.

Similarly, newly non-exempt employees and their managers can be trained to properly manage the use of technology outside the workplace. Surgery centers can require employees to request any need to use technology outside the workplace (e.g., remote access) in order to monitor the use of such technology. 

Surgery centers can also manage properly exempt employees, such as department managers, to regulate their contact with non-exempt employees outside of their regular work schedule. Where a manager may have been used to e-mailing her subordinate exempt employee late at night, that manager should be instructed to be mindful of such e-mails with a newly non-exempt employee. Managers can assist in ensuring that newly non-exempt employees are not tempted to work after hours through the use of technology or otherwise.

The new overtime regulations can be managed in a way to control unexpected overtime costs. In order to effectively manage such costs, newly non-exempt employees and their managers should be trained to ensure adherence to the law while also controlling the amount of overtime hours worked to meet businesses needs and expectations. With a proper communication and training plan, surgery centers can balance the rights of newly non-exempt employees and the interests of the surgery center itself.

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