Overtime rules pose massive challenges for employers


by: Nick Otto

Featuring ComplianceHR’s own, Tammy McCutchen.

Employers who haven’t already started preparing to adhere to the Department of Labor’s proposed overtime rules – raising the minimum salary for FLSA exemptions – are already behind the eight-ball, according to one expert.

“Do not wait for the DOL to publish its final rule to begin preparing,” says Tammy McCutchen, a principal with Littler Mendelson and former administrator of the wage and hour division at the U.S. Department of Labor.

Instead, she says, put your organization in a position that will allow the changes to be implemented within two months of the final rule being published. “You don’t necessarily have to pull the trigger,” she added, speaking at the Society for Human Resource Management’s 2016 legislative conference in Washington, D.C. this week.

Review your current processes such as timekeeping and overtime control, as well as current policies like mobile device use, travel and off-the-clock work.

A simple set of steps employers should consider taking to reduce future headaches include:

· Identifying employees who need to be reclassified.

· Developing new compensation plans for the reclassified employees.

· Reviewing wage-hour policies and processes.

· Communicating changes at all levels.

· Training the newly reclassified employees and their managers.

For employers having trouble identifying positions for review, McCutchen offers a few suggestions.

For starters, employers should look at all salaried positions below $60,000 annually. While the current DOL proposal has a threshold of $50,440, she says she’s heard it could be bumped higher – or may even be pushed down.

It’s also good, she adds, to evaluate positions in the lowest two-thirds of paygrades, as well as those positions with a large number of incumbent employees.

The job classifications McCutchen calls “class-action favorites” that employers should be mindful of include:

· Accounting

· Assistant managers

· Sales and sales support

· Help desk functions and other computer employees without programming duties

· Customer service

· Technicians

Once job roles have been identified, another big question on an employer’s plate includes whether to give a salary increase or to take a hit with overtime pay – advising employers to pull and analyze salary and incentive pay data.

Calculate what the cost would be to increase employees to the $50,444 mark or what overtime would cost [(weekly salaries/40) x 1.5 x expected overtime hours].

And although the likelihood the salary threshold will be amended is low, the other contested aspects of the proposed rule, like the automatic annual salary escalations and the modified duties test, will most likely be challenged.

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