Do you employ manufacturing first-line supervisors, retail and restaurant employees, or bank tellers? These jobs, as well as other similarly paid jobs, are likely to be affected by the Department of Labor’s proposed changes to overtime rules. While the proposed changes are not yet law, it is critical that you take steps to prepare now.
List all your exempt positions with salaries below the proposed salary threshold of $970/week, or $50,440/year.
Determine a plan for compliance. Will you increase salaries for positions close to the threshold so they remain exempt? Or, does it make sense for those positions to become non-exempt? SHRM offers this guidance from Paul DeCamp, an attorney with Jackson Lewis:
- For employees who probably will be reclassified, determine how many hours they are working per week to predict pay going forward with reasonable accuracy.
- Determine how to set nonexempt pay rates. Will the hourly rate simply be the current weekly salary divided by 40, or will you lower the hourly rate to account for the possibility of overtime compensation?
- For employees paid between $100,000 and $122,148 per year, determine whether those jobs satisfy the full duties test of one or more exemptions, as opposed to the relaxed duties standard applicable for highly compensated employees. (For more information on duties tests, click here.)
You’ll want to plan your communication strategy as employees may already be worried about shifting to non-exempt and losing current benefits. Identify potential employee concerns and proactively address them. Here are some suggestions to consider:
- Consider employee impacts that extend beyond compensation. For example, in some organizations, a change from exempt to non-exempt may also bring a change in benefit eligibility. What, if anything, do you want to do to ease the transition for your impacted employees?
- Consider potential labor impact. In some organizations, a change from a salaried supervisor role to an hourly individual contributor role could also subject the role to collective bargaining agreements; tread carefully.
- Determine how your impacted employees will be notified. Will you have group meetings or will you plan for individual notification sessions? Determine the materials you will provide to employees to help them understand and navigate through the change.
- Determine your manager engagement plan. How will you train and engage managers?
Look strategically at how the proposed changes in overtime will impact your organization.
- If impacted employees are now paid hourly, do these employees no longer have email and/or remote work eligibility?
- Will you be shifting exempt responsibilities to roles that will remain exempt? How will you project manage this effort?
- How will you provide access to time and attendance tools?
- What can you do, in terms of process improvements, while you ensure compliance with new labor laws? For example, is now the time to consider outsourcing some of your human resources functions?
By thinking ahead, and being proactive, you will help your organization manage through what is anticipated to impact one-quarter of America’s workforce. Be prepared.