Going into Overtime: DOL's Final Overtime Rule

Football here and that means we're going to be seeing a lot more nail-biting football fans watching their teams duke it out into Sunday afternoon overtime.  But on December 1, 2016 employers will now have their own overtime issues to be nervous about.  The DOL has made some major adjustments to their overtime rules and the resulting changes will have a huge impact on workers (an estimated 4+ Million of them) and their employers.  One of the biggest changes is that the DOL increased the salary basis test for non-exempt employees from $23,660 to $47,476 (or $913/week).  This means that if you have employees making less than that $47,476 amount on December 1, 2016 you'll probably need to start paying them for any hours worked in excess of 40 per week.

What this really means is that on December 1, 2016 there are going to be a lot of employers out of compliance and a lot more employees who will be eligible for overtime.  We've seen a ton of small businesses who have a hard time complying with the FLSA to begin with, so we're not sure what's going to happen with this new rule.  The result of this change may not be seen immediately.  My guess is that new wage and hour claims (which happen to be some of the most common employment claims that employees make) will start to trickle in once employees realize how much money they're losing out on.

Here are the big takeaways to note:

• Increase from $23,660 to $47,476 ($913/week)
• Increase highly compensated employee compensation threshhold from $100k to $134,500. 
• Continuous update to salary threshhold every 3 years with step increases.  
• Effective date of December 1, 2016

So what should employers do?   We're recommending that employers take the following steps prior to December 1, 2016:

1. Pull a list of employees who make less than $47,476.00 (or $51k if you don't want to do this again in three years).
2. Communicate to these employees that their positions will be reclassified as non-exempt on December 1, 2016;
3. Explain to them what non-exempt means and why the change is occuring;
4. Consider implementing policies that address when employees should work as well as how schedules and hours are approved;
5. Consider reviewing  and updating any documentation that describes exempt/non-exempt employment (Job Descriptions, Handbooks, etc.).
6. Consider implementing some sort of time tracking software like TSheets or Harvest
7. Determine financial implications and address by capping hours, reducing hours, adjusting salaries, or budgeting in overtime.

As with most HR issues if you operate in California you're playing by a different set of rules, which we'll try to cover in a later blog post.  And if you have any questions, feel free to reach out to us at info@suitless.com