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Survey: Many retailers still plan to comply with overtime rule


More than half (56%) of retailers plan to comply with the planned Fair Standards Labor Act (FLSA) overtime rule for exempt employees on Dec. 1, the date it was to go into effect, despite a Nov. 22 injunction that puts the plan on hold.

That is among the findings of a spot survey of U.S. retailers by the Hay Group division of Korn Ferry.

The overtime rule, which was set to go into effect Dec. 1, would have had an immediate impact on exempt employees who earned less than $47,476, as these employees would now be eligible for overtime time-and-a-half pay.

“This injunction came just eight days before the ruling was to go into effect and many retailers had already either communicated or implemented plans, so turning back was not an option,” said Craig Rowley, Korn Ferry Hay group senior partner, retail and consumer. “This minimum pay was not driven by market practice and represents a significant cost to many retailers. The retailers that do not plan on making immediate changes are in a ‘wait and see’ mode.”

Twenty-four of survey respondents said they will not implement changes due to the injunction and will wait for the ruling, while 21% say they will make changes on a case-by-case basis.

The survey found that 65% of those who had planned to increase exempt employees to the $47,476 salary threshold still plan to do so, with 35% saying they will wait for the ruling.

Also, when considering what they will now do with exempt employees they planned to make non-exempt to comply with the ruling, 35% say they will keep them exempt and not pay overtime, and 65% say they will make them non-exempt and pay overtime.

More than half (51% ) of respondents say that despite the injunction, they will still offer new exempt employee hires the FSLA minimum rate of $47,476, even if the new hires were in jobs that previously earned a lower base salary.

“With 59% of respondents saying the ruling will impact a moderate to significant amount of employees, this is a big issue for retailers,” said Rowley. “It has yet to be seen how exactly this will change the industry when and if the ruling goes into effect.”

The Korn Ferry Hay Group survey of 68 retailers representing nearly $1 trillion in revenue was conducted from Friday, Nov. 25 through Tuesday, Nov. 29, 2016.
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