CALL US TODAY 877-763-5111

  • Banner1

Managing Changes In Human Resources | Overtime Policy

Managing Changes In Human Resources: Prepare For The New Federal Overtime Regulations

Managing changes in Human Resources is a fine balance in the best of circumstances. With the United States Department of Labor (DOL) preparing to make significant changes in overtime exemption requirements, many companies are scrambling to prepare.

Background

In July 2015, the DOL published a set of proposed changes to the minimum wage and overtime regulations. The proposed changes, published in the Federal Register, include nearly doubling the minimum salary required for exemption, raising the annual compensation for exemption of “highly compensated” workers, and establishing a system of automatic updates to salary and compensation requirements in the future. The final text of the changes have not yet been published, though they are expected by July 2016, and once the final regulations have been published, companies will have only 60 days to comply.

Specifics Of Proposed Changes

  • Minimum Salary Level For Exemption – Currently, full-time employees salaried at a minimum of $455 a week or $23,660 annually are considered exempt from overtime. The proposed regulations would raise those figures to $970 per week or $50,440 annually.
  • Exemption For Highly Compensated Employees – The proposed changes raise the minimum for an employee to be exempted on the ground of being “highly compensated” from $100,000 to $122,148.
  • Automatic Adjustments In Future – The DOL intends to establish a mechanism that will automatically adjust the salary and compensation level required for exemption in future.
  • Revised “Duties” Test – The DOL allows exemptions for “bona fide” executives, administrators, professionals, and outside sales people. These are defined by a “duties” test. The DOL has not proposed specific changes to the Duties test yet, but has requested comments on whether revising that test is warranted.

How To Prepare For Upcoming Changes

Obviously, it would be impossible to be ready for full compliance before the final text of the new requirements is published, but taking steps now to evaluate and plan will make changes easier for your company later on.

  • Evaluate – Assuming the final regulations reflect the proposal, evaluate how many employees and hours will be affected. It would also be a good time to evaluate your company’s timekeeping system to be sure it can support any changes required.
  • Estimate And Compare – Use the proposed regulations to estimate how much it would cost to continue operating as you have been, reclassifying employees as non-exempt where required and paying the overtime; estimate how much it would cost to raise salary levels for employees who work overtime to $50,440; and put together an estimate for reclassifying employees as required and hiring additional non-classified employees to ensure than none work overtime. Compare to learn which scenario provides the best outcome for your business.
  • Make A Plan – Once you have the data you need to make the best-informed decision possible, make a tentative plan of action and be prepared to launch or adjust that plan as soon as the final text of the DOL regulations are released. Better planning makes a smoother transition and builds confidence with your work force.

Consult An Expert

Wage and Hour law compliance can be a complicated challenge, especially during times of major change. The Payroll Company can help you managing changes in human resources in order to stay compliant and profitable. Contact us online or call us at 877-763-5111 to learn how The Payroll Company can keep your business running smoothly through these big changes.