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WEST PALM BEACH, Fla. – As the deadline for the new overtime rules rang on August 23, there wasn’t much reaction in credit union land. Despite the national hype about the controversial revisions, credit unions generally agreed that the impact is expected to be minimal. The Department of Labor has revised the exempt status rules and tests for “white collar” employees under the Fair Labor Standards Act. Among the revisions include rewriting the salary basis test to define situations when an exempt employee’s salary status could be lost and streamlining the duties test. Under the newly effective rules, employees who earn less than $23,600 a year are automatically eligible for overtime pay. In addition, salaried employees who earn between $23,660 and $100,000 may lose overtime based on duties’ tests. Those making $100,000 or more will lose overtime rights unless they do not regularly perform professional, administrative or executive duties. Labor unions and those opposed to the new rules argue that the revisions are intended to reduce employers’ costs by cutting the number of workers who are eligible for overtime pay. Estimates of the number of employees who will lose their overtime eligibility are uncertain with numbers ranging from 107,000 to 6 million and those who could now be eligible projected up to 1.3 million. Over at the country’s largest credit union Navy Federal Credit Union it was business as usual. “The impact of the Fair Labor Standards Act enhancements is minimal for us,” said Navy Federal Public Relations Manager Loren Moeller-Carson. “Our exempt salaries exceed the new minimum requirement, and procedures are in place to ensure our jobs are properly classified and compliant with the new regulations.” Most credit unions viewed the time before the deadline as an opportunity to re-evaluate their employees’ duties and responsibilities to determine exempt vs. non-exempt status and update accordingly. “We reviewed it and didn’t see how it would impact us in any way in how we pay overtime,” said Raleigh, North Carolina-based State Employees Credit Union Vice President of Payroll/Personnel Bob Woodson. “We were already covered with new standards and the employees who are exempt fall under administrative or executive exemption. According to experts the greatest challenge in compliance may be determining how the new regulations mesh with state and local laws. Some 18 states have wage-and-hour laws that will have some effect on the way employers classify the overtime status of their workforce. California, Colorado, Hawaii and Oregon have statutes that supersede the federal regulations, and the new federal regulations should have little or no effect on employers in those states. A June 22 audio conference sponsored by CUNA and Jackson Lewis LLP Attorney Teresa Burke Wright outlined the following steps that credit unions should take in preparation for the rules change: * Develop an implementation strategy for response to the final regulations. * Review salary levels and identify any current exempt employees who fall below the $455/week minimum. * Review any non-exempt employees whose annual earnings exceed $100,000 to determine whether they would qualify under the Highly Compensated Employee Test. * Conduct a review of non-exempt and exempt positions to determine whether any positions should be reclassified as a result of the new regulations. * Review payroll practices for exempt employees to ensure no improper deductions are taken from exempt employees’ salaries in practice or written policy. * Develop, implement and publicize a Safe-Harbor Deduction Policy that should state the employees’ salaries are intended to cover all hours worked, the employer intends to pay the employees on a salary basis and will not make improper deductions from salary that are prohibited under the FLSA, and include a way for employees to report improper deductions. * Institute and publicize a reporting mechanism employees can use to report payroll errors including salary deductions and incorrect paychecks. * Train personnel responsible for processing payroll regarding deduction policy and limitations on permissible deductions. * Review non-exempt pay practices. [email protected]

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