New federal Fair Labor Standards Act (FLSA) regulations set to take effect August 23 may require AIA member firms and architects to make changes to help ensure they are properly paying overtime to their employees. The new U.S. Department of Labor rules update which employees, including many “white collar” workers, are exempted from receiving overtime pay at time-and-a-half rates after working more than 40 hours in a week.

The rules generally exempt “executive, administrative, and professional employees” from overtime pay requirements under federal law. But, according to the Department of Labor, under the new rules, workers earning less than $23,660 per year—or $455 per week—will be entitled to overtime, regardless of the employee’s duties or other aspects of pay. Other policy changes include a new streamlined “highly compensated” employee test for certain workers earning at least $100,000 in a year, who will be exempt if they meet specified pay and duty requirements.

The department has worked to clarify the definitions of the employment classifications and exemptions, particularly the ever-ambiguous “administrative” exemption. The “duties” test can be found on the DOL Web site.

What does this mean to me and my firm or component staff?
“The potential liability is great, and we always urge caution when making exemption decisions,” says Laura Viehmyer, SPHR, CEBS, CAE, the AIA national component’s managing director of human resources. There are different ways to confirm that practices are complying with the new regulations, she says. One method would be for managers to audit their employment rolls by evaluating employee job descriptions and the percentages of time devoted to particular duties against those criteria in a checklist of the new requirements. But Viehmyer cautions that general job descriptions alone are not necessarily indicative of a particular classification. For example, she says, the title “intern” in one firm might mean something completely different in another firm. The titles and job descriptions may even vary among offices in the same firm.

For some positions the exemption determination may be relatively easy, but, when in doubt, it behooves the employer to take extra care to make sure they get things right. “There are many positions at the cusp of eligibility for overtime or for losing overtime benefits,” Viehmyer advises. “The process requires a lot of due diligence to determine how a position should be classified.”

This is the first time the rules have been updated in decades and Congress still may seek to block their implementation. Viehmyer notes that these new regulations are a reminder of the need for firms of all size to be aware of fair labor and employment practice laws and vigilant in the evaluation of jobs and position descriptions. Misclassifications can lead to litigation, fines, penalties, and other expenses.

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