Have you heard about the new Department of Labor Law’s Overtime regulations? Effective December 2016, employees earning less than $47,476 are entitled to earn overtime. Raised from the previous $23,660 annually, this ruling dramatically widens the circle of employees that should be earning time and a half after 40 hours a week. This re-evaluation of overtime procedures is now slated to be increased every 3 years; rather than resist the changes occurring, employers should put a plan into place now for when the law takes full effect later.
Employers should begin by evaluating their current workforce to determine which employees will be eligible by the time December rolls around. One way to figure this out is to convert all of your salaried workers to hourly wage and estimate what their overtime costs would be.
It must be noted that overtime also includes tracking time for hours worked outside of the office, including time employees worked from home, travel time and time spent answering phone calls or emails. To effectively monitor this information, policies regarding employee use of mobile devices after working hours should be implemented and followed. Legal counsel should be included when this audit takes place.
There a few ways employers can deal with new payroll policies without putting too much stress on their businesses. If the workforce of company consists of employees that are already very close to the benchmark, employers may consider raising the salaries of those employees to meet the new requirements. This can have a positive effect of morale if done correctly and judiciously throughout the company. You must consider, however, how the lower salaried employees will react to a pay raise for those already making more than they are to begin with. This could result in a demand for a company wide raise, which may negate any savings in payroll.
Another solution is to implement a sophisticated time clock system and an order of operations for working overtime. This could be executed by requiring pre-approval for hours in excess of the regular 40 hours per week, or the use of a system that alerts the employee and employer when they get close to 40 hours.
Employers may also consider reassignment of duties throughout their workforce. A duty that falls under one of the potential overtime employees could perhaps be delegated to a part-timer or someone who could handle the task more efficiently. The employer may even consider making a few new part time hires to even out the workload as well.
These new overtime regulations will certainly have a large impact on employers and employees alike. To make it a positive experience for everyone, it is wise to begin restructuring now, before the law goes into full effect in December. Whether employers choose to simply pay the overtime without changing their payroll structure, or decide to make changes, it should be done fairly and with plenty of time before winter and the holiday season are upon us.
For more information on the new rules, visit the DOL (Department of Labor) at dol.gov.
If you have questions or need assistance sorting out the new Overtime Laws or other employment-related matters, please contact my firm at www.danzlaw.net.