Update: Proposed Changes to FLSA Overtime Rule Dismissed
8 Ways to Prepare for the New FLSA Overtime Rule Regulations
Are You Ready for the New Overtime Regulations?
Fact: you have a million tasks on your to-do list and one that is looming over your head is preparing for the new FLSA overtime rule regulations. With the December 1 date quickly approaching this is just one of many year-end items that have to be completed and you’re wondering where to start. Never fear, APS has provided a handy checklist of 8 ways to prepare for the new FLSA overtime rule regulations:
1. Audit Your Currently Exempt Employees
Determine if these employees meet the regulation’s new salary requirements and the duties test. Remember, the duties tests themselves have not changed, just the salary requirements.
2. Reclassify Employees
If an employee is currently exempt doesn’t typically work 40 hours a week, there may not be a need to raise their salary to the new threshold. You may be able to reclassify them as non-exempt instead. If you’re not typically having to pay these types of employees overtime, the reclassification shouldn’t cause any issues.
If an employee typically works more than 40 hours a week, consider increasing their salary to meet the new threshold of $47,476 so the employee can remain exempt. A compensation raise may be more cost effective than having to continually pay that employee overtime. Of course, this consideration is dependent upon that employee’s current salary. It’s easier to justify a salary bump if an employee currently makes $43,000 versus $33,000.
3. Manage Unhappy Employees
If you’re concerned that some employees may be unhappy with being reclassified as non-exempt, you can continue to treat those workers as “salaried non-exempt.” This means they can continue to receive their fixed salaries for working up to 40 hours a week, but must also be paid overtime for any hours over 40 they work in a week.
4. Conduct Cost Projections
You may find it’s more cost effective to hire additional employees to work regular hourly rates for 40 or fewer hours a week than having existing employees work a large number of overtime hours.
5. Shift Your Workweek
Do you need to adjust when you workweek begins and ends? You may find shifting from a traditional Monday through Sunday workweek could eliminate the potential for significant overtime hours worked.
Michael Abcarian, managing partner of Fisher Phillips in Dallas provides this example:
If employees work 12-hour shifts for seven consecutive days but then are off for seven, employers might adjust the workweek to start on Thursday and end on Wednesday, rather than a traditional Monday through Sunday workweek.
“In this scenario, changing the workweek would reduce the amount of overtime owed by 36 hours,” Abcarian said. But “be aware that playing games through multiple changes to the beginning and end of the standard workweek to periodically reduce overtime pay costs may be disallowed by federal or state compliance officials.”
6. Conduct Timekeeping Training
Employees who are reclassified from exempt to non-exempt may be new to the “clock punching” game. Train your newly non-exempt employees on your company’s timekeeping and overtime procedures. If your company does not currently have procedures in place, now’s the time to create those policies and add them to your employee handbook.
Remember: If an employee works overtime without obtaining prior permission, you are still required under the FLSA to pay that employee for all of the time they worked. “While you must pay them, you may also discipline them for violating a policy that prohibits unauthorized work hours, said Abcarian.
7. Regularly Adjust Compensation Levels
Now is the time to put procedures in place to adjust employee compensation levels every three years to coincide with the FLSA overtime rule regulation’s requirement. Planning now saves you valuable time down the road.
8. Review Other Potential Issues
While you’re taking the time to overhaul your employee classifications and salaries to comply with the new regulation, review other potential issues like gender-based pay equality requirements and other potential discrimination issues. You may find other salary adjustments are necessary to stay compliant.
How APS can help
APS’s Time & Attendance solution simplifies time and labor management to ensure your company is accurately tracking employee hours and maintaining compliance. APS’s unified system can help you:
- Manage employees’ schedules and accurately track time for controlled labor costs
- Automatically track employees based on their classification
- Ensure accurate payroll processing
- Easily run reports for salary exempt versus salary non-exempt employees per pay period
- Store important company and employee documents securely in our cloud-based solution