HomeMy WebLinkAboutIR 9897 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9897
To the Mayor and Members of the City Council June 7, 2016
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*a SUBJECT: FAIR LABOR STANDARDS ACT CHANGES
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The purpose of this report is to discuss the changes recently announced to the Fair Labor
Standards Act (FLSA) and their impact on the City of Fort Worth.
Background
On March 13, 2014 President Obama directed the Secretary of the U.S. Department of Labor to
prepare and propose new regulations focused at the rules for exemptions of certain employees
from the FLSA overtime requirements. The most common exemptions from the FLSA overtime
requirement are known as the "white collar" exemptions pertaining to executives, administrative
and professionals. These overtime exemptions apply if: (1) they are paid a fixed minimum salary
for each workweek regardless of the number of hours they work or the quality or quantity of work
(the "salary basis" test) and, (2) they perform specific executive, administrative and professional
job duties outlined by current regulations (the "job duties" test). The primary reason why these
types of positions where targeted is to capture those workers whose pay has creeped up over the
salary threshold and to decrease the substantial litigation regarding employees for whom
employers assert the "white collar" exemption.
Final Regulations
On May 17, 2016, the Department of Labor unveiled the final regulations. The most significant
changes include the following:
• Salary Test Changed to $913/week ($47,476 per Year) - This threshold doubles the
current salary threshold level ($455/week or $23,660/year).
• Automatic Salary Threshold Increases Every 3 Years (Not Annually)
• Duties Test is Unchanged
• Effective Date is December 1, 2016
Impact
The City of Fort Worth has been prepared for quite some time for these regulation changes by
performing the below:
• Reviewing exempt positions;
• Identifying individuals that may be affected;
• Determining the impact of change on wages/budget; and
• Considering alternatives for compliance.
Based on the final regulations and consideration of implementation alternatives, as it currently
stands today, approximately 144 employees will be affected by the changes. Of these 121 will
have their classification changed from exempt to non-exempt and be eligible for overtime. In
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9897
To the Mayor and Members of the City Council June 7, 2016
Page 2 of 2
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*a SUBJECT: FAIR LABOR STANDARDS ACT CHANGES
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addition, another 23 employees while maintaining their exempt status, will have their wages
increased to the statutory threshold of $47,476. All the changes are expected to cost
approximately $114,000 annually including associated benefit costs and affected employees will
be notified in advance to comply with the December 1, 2016 implementation requirement.
Should you have any questions regarding this Informal Report, please let me know.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS