HR and Payroll Guidance for Leadership Teams

Get Ready: New Overtime Rules Likely Here Soon

Online timesheet form on a digital tablet

The Department of Labor’s proposed overtime rule may go into effect as early as June 2016.

By now, you probably know about the Department of Labor’s (DOL) proposed overtime rule, which would change current regulations and allow more previously exempt employees to receive overtime pay.

While employers and lawmakers expected to see the new ruling in late 2016, that timeframe could now move to as early as April or May, with it going into effect possibly as early as June.

Earlier this month, the DOL reportedly sent the final ruling to the Office of Management and Budget (OMB), which is the final step before the rule is released to the public. Once released, the rule is set to go into effect 60 days later.

How Can You Prepare?

1. Review

Employers should begin reviewing their positions immediately. Those employees earning below the proposed new salary threshold ($970 per week or $50,440 per year) will be considered non-exempt.  In these instances, employers will need to determine whether to increase salaries so employees remain exempt or reclassify those employees as non-exempt. Likewise, even those employees who meet the new salary threshold could be considered non-exempt if they don’t meet the executive, administrative or professional requirements of the Duties Test.

2. Track

If an employer chooses not to raise salary levels, they should begin to closely track the hours worked by those employees facing reclassification. This can help employers determine how to adjust scheduling, if possible, and set wages so they can minimize overtime pay and/or accurately forecast it.

3. Plan

Employers should develop communication and training plans to prepare those employees who will be reclassified under the new regulations. Any communication to employees should clearly explain why they are losing their exempt status and address any possible morale issues that would result from the change.

Likewise, employers should implement training strategies that educate both managers and newly reclassified employees on how to properly track time and attendance so that all non-exempt staff are receiving and recording their meal and break period entitlements. These trainings should also establish clear boundaries for what constitutes work time. Additionally, employers should review their handbook and policies to determine whether updates are necessary.

Compliance is Key

Regardless of how employers choose to handle the proposed overtime ruling, remaining compliant with the FLSA is key. The legal and financial implications of misclassification can run high, even if only for one, or a handful, of employees.

For more information on proper classification or how the possible pending changes may affect your business, contact Eileen Clark, VP of HR Client Services, at 215-654-9140 x. 404.

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