How Should Your Company Prepare for the New Overtime Rule?

Posted July 19, 2016

In May, President Barack Obama's Department of Labor released a new rule that mandated overtime pay for salaried workers who make $913 a week ($47,476 annually) or less - an increase from $455 a week ($23,600 annually) or less.

This means companies will need to start tracking hours for employees who are paid a salary of $47,476 or less. That is a major change, since many companies don't track the hours of their salaried employees.

Agree with it or not, the rule is part of President Obama's plan to address stagnating middle class wages, and it is now the law of the land. As such, businesses should take several steps to address the new rule.

What to consider

In light of the possibility of paying more overtime, employers may want to reclassify their workers as exempt by paying them a salary above the $47,476 threshold.

Salaried workers may have enjoyed the fact that their hours weren't being tracked. Often, this means they were able to enjoy some degree of flexibility in their schedule.

But now, salaried workers may be worried about the added scrutiny that could come with their employers tracking all of their comings and goings. Furthermore, being paid a salary instead of an hourly wage is often seen as a sign of prestige, and some salaried workers may feel like having their hours tracked is a bit of a demotion.

Reclassifying workers as exempt could also help to clarify the lines of responsibility for managers and workers.

Steps to take

Employers need to consider duties affected workers perform every week and the number of hours they often work. Employers should also consider what job tasks can be reassigned or taken out. Companies may also want to determine if an entire business process ought to be outsourced.

Communicating the change

With the deadline for compliance set for December 1, 2016, employers shouldn't waste any time not discussing the upcoming changes to their affected employees.

Management should let their employees know: This isn't a demotion and it doesn’t mean they are becoming hourly workers. Managers should also let affected employees know how much overtime the company can afford to have them work.

Working out of the office

The new rule change also raises the issue of being paid for doing off-hours work remotely. Not surprisingly, employees who are given company smartphones, tablet or laptops often work longer hours and court decisions have shown that companies could be held responsible for not paying their workers for, say, regularly answering emails while at home in the evening.

Employers may need to install software on company devices that helps them track hours. Management should also let nonexempt employee know what kind of work should be performed outside the office for overtime purposes.

If your company is in need of more employees to manage the changes of the upcoming overtime rule, contact Ambassador today. Work with one of the leading employment agencies in the South!