In part one of our three-part series on “The New Overtime Rules”, we detailed the new overtime pay requirements proposed by the Department of Labor. In part two, we let you know how they could impact your business. In today’s series-concluding piece, we’ll discuss the best practices to effectively address these potential changes:
With the unveiling of the U.S. Department of Labor’s new overtime pay requirements, businesses are rushing to stay on top of any upcoming changes in the event of a Final Rule. Over one million new workers stand to be made eligible for overtime pay with the proposed regulations, raising the overtime salary threshold from under $24,000 to under $35,000 – which has some employers rattled.
The potential impacts on employee compensation, corporate policies, and business costs would be substantial – but there’s no need to panic. Organizations can still manage high profile changes in legislation with these five best practices worth implementing now:
1. Do your due diligence
Before anything else, sit down and formulate your company’s game plan. How will these changes actually impact your decisions moving forward? Who will remain exempt, and who will make the switch? For those in the gray area, consider every bit of information available to make an informed decision. Be sure to study the new policy carefully before communicating anything with your employees.
2. Educate employees on all policy changes
Clear communication between employer and employee is vital before any shift in business legislation, large or small. Maintaining an open line of communication with them – both exempt and non-exempt – will be key before, during, and after changes are established. As part of a transparent communication process, be sure to explain any potential implications to morale, compensation, and employee management. Involve all affected parties through training so workers themselves can play an active role in introducing these changes to the business. Big changes can mean big repercussions in the world of wage and hour regulation if employers aren’t careful – so keep the workforce engaged and updated to the letter. Lastly, indicate that this plan is not written in stone – there is still an opportunity for the proposal to once again be blocked, delayed, or scrapped.
3. Request that all employees track hours
It may be time to focus on more than just non-exempt time tracking – remote and exempt workers should be considered as well. The Fair Labor Standards Act (FLSA) regulations do not limit an employer’s ability to track working time, whether the employee is exempt or not. An employer may even require an exempt employee to do things such as record and track hours and/or work a specified schedule – all without affecting the employee’s exempt status. Why track an exempt employee’s time? To promote work/life balance, accurately track accrued PTO, or ensure leave eligibility, to name a few. With a reliable time tracking system, a record of all employee time – including exempt – can support, clarify, and inform businesses on any wage and hour hiccups down the line. Employers will also need to reexamine their deskless and remote practices in order to monitor working hours more effectively – otherwise, business-as-usual could get very problematic, very quickly.
4. Keep exempt salaries stable regardless of hours worked
As many companies are already aware, when tracking an exempt employee’s hours, ensure that their pay does not fluctuate, irrespective of whether they worked under or over 40 hours in a given week. Using working hours to dictate their pay would render them no longer exempt. Remember that the idea behind tracking exempt time is to protect and inform both employer and employee – not to redefine their status.
5. Verify compliance adherence by designating supervisors
While everyone should be accountable for observing compliance, assigning gatekeepers to monitor compliance status in different departments can help simplify the process. With a system that offers real-time visibility into hours, pay, and time off, they can ensure that there are no red flags. By working together with employees, they can be the first to know if something is amiss or in need of improvement. An automated time tracking system will be a fundamental tool in helping these gatekeepers ensure these overtime hours are measured correctly.
Big changes like the new overtime ruling introduces numerous considerations from a technology, business, and legal standpoint – and knowing how to face them can alter the course of your business’s ongoing success. However, keep in mind that none of these changes are permanent just yet. The 2016 proposal attempt taught us that nothing is absolute until a Final Rule, so keep an eye on any future announcements. In the meantime, by learning the changes, understanding the impacts, and knowing what steps to take, businesses can forge ahead regardless of what lies in wait – and even emerge a better organization from it.
Read the complete series:
- What exactly are the changes?
- How does this affect your business?
- What are some best practices for handling these changes?
Keep an eye out for an upcoming webinar series with Replicon’s compliance experts, helping companies understand the impacts of the OT ruling, and how to manage the subsequent changes.