On December 1st, 2016, an estimated 4.2 million salaried employees are expected to become eligible for overtime pay as a result of the new FLSA ruling published on May 23rd by the Department of Labor. How employers will strategize to minimize the potential impact on labor expenses and remain compliant with the new ruling is a source of great discussion. There is also a good deal of misunderstanding in what options exist for employers. For example, should employees be reclassified, are there positions that don’t apply, how do non-discretionary bonuses factor in, etc.?
Misperceptions with New Overtime Ruling
Perhaps the greatest misperception is the assumption that all employees under the new threshold of $47,476 must be reclassified as hourly. This is actually not the case. Employers may continue to pay the employee a salary, but must also now track hours and pay those employees overtime pay.
The DOL has published a “Questions and Answers” page to address many of the most commonly asked questions. We highly recommend you take a moment to review those answers.
Questions and Answers from the Department of Labor
SEE ANSWERS: https://www.dol.gov/whd/overtime/final2016/faq.htm
Solutions to Prepare
Automated Time and Attendance
One of the most important adjustments for employers to make is to begin tracking hours worked for employees under the threshold or employees receiving bonuses (up to 10%) to meet the salary requirement. If you’re not already using an automated time and attendance solution to track employee hours, now is the time to begin. Not only will it help in your compliance, but will also reduce your overall cost of employee wages and overtime.
HR Compliance Support
In preparing to communicate with employees regarding the new ruling, we recommend employers review current job descriptions, overtime policies, off-the-clock work policies and the Employee Handbook in general to ensure adequate protections are in place for employees and employers. If you need assistance, we can assist with your HR compliance support through online or live HR expert support.