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January 27, 2011
Possible FLSA Recordkeeping Rule Could Have Huge Impact Employers

The Wage and Hour Division (WHD) is considering a proposed rule that would require employers to perform a written classification analysis for every worker that is excluded from Fair Labor Standards (FLSA) coverage. According to a recent poll, if such a rule becomes effective, it could take some organizations over six months to complete every classification analysis.

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The poll asked respondents “How long would it take your org to write a classification analysis on every exempt employee?” The results are below:

3 months 25%
One month 23%
One week 19%
6 months 18%
Over 6 months 16%

Initiative to Update the FLSA Recordkeeping Requirements
The Department of Labor (DOL) recently published its Spring Regulatory Agenda 2010. In it, the Department announced that it intends to update the FLSA recordkeeping requirements, which would support the DOL’s strategic goal to “bring greater transparency and openness to the workplace.”

As part of that initiative, the department is considering a proposed rule, referred to as "Right to Know Under the Fair Labor Standards Act", that would employers to:

  • Perform a written classification analysis for every worker that is excluded from FLSA coverage
  • Disclose the individual analysis’s to each worker
  • Retain the documents in the event of a WHD investigation

The proposed rulemaking would also explore requiring employers to provide a wage statement each pay period to their employees.

Currently employers are not required keep a written analysis on why an employee is exempt. Creating these records will be a time-consuming task for employers who have a large number of exempt workers.

For example, 18 percent of poll respondents said that it would take their organization 6 months to complete every classification analysis, and 16 percent estimated it would take even more time. Around 20 percent—presumably smaller companies—reported that it would take them one week. A quarter of poll respondents estimated that it would take their organization 3 months.

A similar survey was recently conducted on HR Daily Advisor. Among other questions, the survey gathered data on how many exempt employees were in respondents' organizations—in other words, how many analyses companies would have to write. The top three responses were 0 to 25 (37.4 percent), 26 to 100 (31.6 percent), and 101 to 250 (12.5 percent).

Take this week's compensation poll.

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Top 100 FLSA Overtime Q&As
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