For many people, December 1 marks the start of the holiday shopping season, but for business owners and HR managers, this date holds new significance in 2016. December 1 is the effective date for the new Department of Labor regulations regarding FLSA changes regarding overtime. The salary threshold for the overtime exemption will be raised to $913 per week or $47,476 annualized.
By now, employers should have already created their list of impacted employees to ensure compliance with the new salary standard. If you haven’t, do this immediately! Employees who fall between the old salary threshold of $23,660 and the new salary threshold of $47,476 now qualify for overtime pay. Based on the determinations made, companies should now be in the implementation phase, which consists of 2 essential elements.
While companies may want to offer a high-level overview of the changes to the entire company, the most important recipients of this message are the affected employees and the management team. Employers will need to notify affected employees according to state regulations. Some states require terms of employment changes to be made in writing and within a period of time. It is also important to note that this change may be disconcerting to some employees who feel as if they are being demoted. In these cases, an in-person conversation before the written notice is advised. For some company cultures, a group meeting may be sufficient.
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In either case, employers will need to consider both legal requirements and morale implications. For managers who work with and manage employees who have lost their overtime exemption, it is important to share this information as staffing levels, schedule changes, and workload requests may be impacted. Managers may need to plan their workload differently to meet overtime budget allocations.
Timekeeping can be a little trickier than it sounds on the surface, especially for employees who have not kept time records in the past. The obvious first step is to train employees on the timekeeping methods currently used by the company (i.e. time-sheets, time-clocks, web timekeeping, etc.). The not-so-apparent part of this training is making sure newly classified employees know what constitutes “work time” and how they manage this time throughout the workweek to minimize overtime costs. This training is critical for managers as well. Managers will need to understand that paying an employee for overtime is not optional. Employees who incur overtime, with or without permission, must still be paid their overtime rate.
A Final Note
While there has been some legislative activity to stall this change, this legislation has not passed the Senate and would likely be vetoed since the Obama administration initiated this regulatory review in the first place. As a result, it is highly recommended that employers stay on track implementing their plan to meet the December 1 deadline. As we’re all constantly reminded by the holiday decorations in our favorite stores, December is just around the corner!