New DOL Rules Could Change Plan Classes
The federal Fair Labor Standards Act requires employers to pay non-exempt employees overtime for hours worked in excess of 40 in a work week.
New regulations from the U.S. Department of Labor that took effect Aug. 23, 2004, change the rules your employer clients must use when determining which employees are exempt from the overtime requirements because the employees are salaried “white collar,” executive, professional or administrative workers.
You need to know about the new rules because they could affect the benefits market as well as overtime costs.
Supporters and critics of the new DOL rules have focused on how they will change the number of employees eligible for overtime pay. The DOL estimates the new regulations will shift 1.3 million employees into the “non-exempt” category, meaning that those employees would qualify for overtime payment. However, the nations largest labor union group, the AFL-CIO, predicts that as many as 6 million workers will become exempt from FLSA overtime protection.
Meanwhile, a large number of employee benefits plans offer different types of coverage to different classes of employees. In some cases, the plans distinguish between different classes by describing the classes as consisting of “exempt,” “non-exempt,” “salaried” or “hourly” employees. Employers need to be aware of whether the new DOL regulations will affect the employee classes in their benefit plans.