6 tips for keeping your project compliant with new OT rules

The Department of Labor recently finalized the nation’s overtime (OT) pay rules, and companies everywhere are considering the changes they need to make to comply with the new regulations. If you’re a project manager, or an executive responsible for pitching and securing new projects, the OT rules could have a big impact on the way you structure and manage projects going forward.

Project managers and teams face daily challenges in meeting stakeholder requirements, schedules and budgets. When the projects are funded by a federal agency (DCAA, GSA, grants), or are used for claiming tax credits (R&D, SR&ED) or capitalization incentives (labor cost), additional challenges arise. Organizations can be audited at any given time, and failing an audit has huge financial and legal implications. Because of this, there is already a significant amount of admin work involved with managing a project, and new OT requirements only increase the burden. With manual, disparate processes to track these projects, there may be issues like:

  • Under/over-reporting of hours
  • Inability to distinguish between costs that can/can’t be bucketed or billed to the client
  • No oversight and approvals for the project, tasks, costs and resources
  • Huge administrative overheads to manage the project
  • Incomplete/ lack of data needed for audits
  • Expensive coverage for hedging against the risk of failing an audit

Organizations need to ensure project compliance and be audit-ready. In light of the new OT rules, here are six best practices to implement now to ensure project-based compliance:

1. Understand the regulatory requirements

Before signing on to a project, it’s important to be on top of the regulatory requirements. Gather all the information about the recent changes and get an understanding of what they mean for you and your projects. Preparing and maintaining a knowledge repository with this information will help you with bidding, planning and running the project. (Check out this blog post for more details on the new OT rules).

2. Train your project managers and resources

It’s critical to make sure the whole project team – not just the c-suite or project manager – is trained on what the specific requirements are, what they need to do to stay compliant, and what the repercussions of not being compliant could be. Training is a major point of failure in most organizations, and since the whole team needs to be responsible and accountable for maintaining compliance, it cannot be emphasized enough.

3. Review historical information before you commit to a project

Completing a project on time and on budget is a testimony to the capability of an organization, and is a major factor in winning new contracts. Project managers need to use insights from previously executed projects (i.e., how many hours were spent or costs incurred), as well as estimate the potential effect of OT costs on the budget, and build a price for the customer based on those two factors. This will prevent any last minute surprises for the client, and also help the organization understand upfront what its payback will be.

4. Assign gatekeepers to ensure compliance

It’s important to assign specific roles within the project to review and manage compliance. This could be the project manager, or another resource who oversees the project and ensures it’s running in compliance with the regulations. The gatekeeper needs real-time visibility into project progress and associated activities to identify eligible tasks/activities/resources, and be sure that there are no red flags. They can also work with the employees on adding additional pieces of information to projects/activities that may be needed in an audit.

5. Be audit-ready

Organizations need to understand that they can be audited at any time. As a best practice, run internal audits with the help of industry experts so you know what kind of information will be needed, if you’re tracking that information, and which systems house it. Doing this will also help you understand the time and effort required for such activities, so you can be prepared and build it into project budgets. It’s important to build the costs associated with this activity into your plan to get a true picture of the actual costs and profit margins.

6. Let technology enable you

Technology can provide huge savings in tracking your projects to meet compliance requirements, in comparison to what manual tracking or a failed audit can cost the organization. Technology solutions can help you better plan and execute your projects, track necessary information, account for all costs, provide real-time visibility into progress and budget and make audits super simple for organizations – all of which help lower the risk of going over budget, provide complete control of compliance and improve the odds of future funding.

Staying on top of the new OT requirements is critical for businesses to be able to deliver results and keep winning new projects. Compliance metrics should be rolled into project deliverables now, and tracked in real-time going forward to avoid costly risk of failure. The use of technology can make the task of managing projects and compliance less challenging and overwhelming for organizations, and set them up for success.

Want to learn more about new overtime legislation?

Register here for our Sept. 20 overtime webinar, hosted by attorney R. Brian Dixon (Littler Mendelson).



Regina Mullen
Regina Mullen
Regina is the Workforce Management Expert & Content Marketing Associate for Replicon. Replicon provides award-winning products that make it easy to manage your workforce. With complete solution sets for client billing, project costing, and time and attendance management, Replicon enables the capture, administration, and optimization of your most underutilized and important asset: time.
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