Upcoming FLSA Changes – What Does It Mean for Mobility?

Effective December 1, 2016, the Fair Labor Standards Act (FLSA), the law that affects exempt vs. non-exempt and overtime payments, will be changing. Currently, an employee earning as low as $405 per week, or $23,660 annually, can be considered exempt from overtime rules. Beginning in December 2016, for an employee to be considered exempt from overtime rules, he/she must earn at least $913 per week, or $47,476 annually, for a full-time employee. This threshold will increase in the future.

How Might It Impact Mobility?

In order to understand how the change will affect salaries of the U.S.-inbound assignment population, SIRVA recommends that mobility managers partner with their labor counsel for assistance, providing samples and descriptions of allowances received by their employees, to determine allowances that should be included in calculating their salaries.

One company with an inbound assignment population has indicated that they intend to implement the following program rules:

• only allowances that remain constant during the assignment can be used for salary calculation
• housing, utilities allowance, per diem and transportation should not be used for the salary calculation
• Base Pay, Assignment Premium, Miscellaneous Foreign Allowance (G&S renamed to MFA to keep constant), and Income Protection allowance would meet the requirements to count towards the salary.

This new FLSA change can also affect U.S.-inbound assignments coming from lower paid areas such as India and Mexico.  A company with a U.S. inbound assignment population has indicated that it intends to implement the following program modifications:

• “Goods & Services” will be renamed “Miscellaneous Foreign Allowance” and will remain constant during the year. They will be recalculated during merit increases and will be adjusted if the amount increases.  This amount will not be adjusted downward during the assignment.                                                                           
• If after this exercise, if an employee’s salary level still does not meet the salary requirements using the allowances approved by counsel, his/her salary should be reviewed and a potential income protection allowance should be implemented/adjusted/raised to ensure they meet the new requirements.
• allowances for U.S.-inbound employees should not be adjusted during the assignment except for variable non salary- defined allowances listed above, but during merit increases, the Miscellaneous Foreign allowance (G&S), should be evaluated and adjusted upward, if updated COLA tables indicate increase required. The allowance should not be reduced at any time during the assignment.

NOTE: SIRVA cannot and does not provide legal, labor or employment advice.  This blog provides one example of how companies address the upcoming FLSA changes.  It does not represent or provide legal advice by an attorney upon which anyone can rely for their particular situation and should not be considered or used as such.  Each employer should consult with their legal advisors to decide how to meet the new FLSA requirements based upon their particular analysis and circumstances.