Via: Office Manager Today, By: Lori Brown
On May 18 the Department of Labor published its long-awaited final changes to the Fair Labor Standards Act’s overtime rules. And although both the White House and the Secretary of Labor intended to “simplify and modernize” the overtime rules, the new rules create new challenges for employers to determine which employees qualify as overtime exempt.
While employers and employees will, for many years to come, debate whether these new rules effectively fulfilled the vision of putting more money in the pockets of middle-class workers, one thing is certain: you are now on the clock, as the deadline for compliance is Dec. 1, 2016. That’s right—Dec. 1, 2016—smack in the middle of the holiday season, and on a Thursday no less.
Let’s quickly recap what’s changing:
- The DOL more than doubled the current minimum salary level from $23,660 ($455 weekly) to $47,476 ($913 weekly).
- In order to keep pace with wage growth and inflation, the $47,476 minimum salary level will automatically adjust every three years.
- An option was triggered for employers to satisfy the minimum salary requirement by including up to 10% of bonuses and incentives.
- The salary level was increased for highly compensated employees from $100,000 to $134,004.
Decisions, decisions
Businesses will undoubtedly have to manage the employee morale issues associated with whatever decisions they make but, without question, the No. 1 concern will be cost. The prospect of simply increasing employee salaries or taking on additional overtime obligations vastly underestimates, if not outright ignores, the financial reality and wherewithal of most businesses. First and foremost, employers will need to compare the cost of providing employees with raises versus paying overtime. From there, they’ll have to consider whether there are ways to minimize the costs of overtime. And, again, it bears repeating—whatever options they choose will require a carefully crafted and thoughtful communication plan as well.
Do the math—easily
With the Dec. 1 deadline quickly approaching, relying on spreadsheets and other manual processes is not a viable option. Here’s an example of how technology can help manage the time and costs involved in complying with the new overtime rules. ComplianceHR has developed a free tool that helps employers compare the costs of giving a salary increase versus paying overtime and also helps calculate a new hourly rate for reclassified employees, which will result in the same weekly pay as they make now, even with overtime pay. Visit https://clientapps.compliancehr.com/a/otcostestimator).
The platform also offers intelligent tools for determining whether an employee meets the duties test to qualify as overtime exempt. The idea is to provide time-strapped decision makers with DIY type tools, hence increasing a company’s confidence in their compliance decisions while not breaking the budget.
Lori Brown is President and Chief Operating Officer of ComplianceHR, a web-based platform that helps companies make critical employment decisions, such as who can be retained as an independent contractor and which employees need to be paid overtime. Contact: (646) 490-3593 or brown@compliancehr.com.
