The best advice for employers waiting for the new
overtime rules? Hope for the best, and
prepare for the worst. Last summer the
federal Department of Labor (DOL) proposed a new overtime rule which would require
employers pay time-and-a-half overtime pay to all workers, even those
performing exempt duties, unless the workers were paid at least $50,440 per
year (for 2016, rising each following year). In Idaho’s job market, that is a
hefty sum that many currently exempt workers are not receiving. Previously exempt workers would then be asked
to track their hours, report them, and be paid overtime for any hours worked
over 40 in a single workweek.
The best?
Perhaps for employers seeking to avoid overtime liability for lower paid
exempt workers, the best result would be that DOL withdraws the proposed rule
(not likely) or that Congress rehects the rule or passes legislation signed by the President
pre-empting the new rule (also unlikely).
Employers don’t have to wait for finalization of DOL's proposed overtime
rule before beginning to analyze their workforce and the implications of the new
rule.
To review: In
order for a worker to be exempt from overtime payments, three criteria must be
met: 1.
The worker must be paid a salary, a set amount per month that does not
change with the amount of work performed (so workers paid on an hourly basis can never be considered exempt); 2. The worker must be paid more than
the salary level set by the rule (currently $23,660); and 3. The worker must
perform exempt duties (the most common being executive, administrative, or
professional duties). The salary level
test has gotten little attention over the past few decades because it was set
so low that almost all exempt workers met it.
But when DOL proposed to double the salary level, employers were
forced to pay attention. The rule was
released last year, and comment was invited.
Nearly a quarter million comments were received. The next step was for DOL to review the
comments, and either amend the rule or release it as a final rule. While we do not know when the final rule will
be released, one of the last steps in promulgation of a final rule is to send
it to the federal Office of Management and Budget for review, and that step
occurred on March 15. So we know that
the final rule is close to being released, and it is anticipated in the next
couple of months. In the meantime, a bill was introduced in Congress that would
nullify the effect of the rule, but it will take some time for that to be
considered (and with no final rule it may be premature) but even if legislation
does come forth, it is unlikely the President would sign it.
·
So
what should employers do now?
·
The first step is to begin analyzing
current positions. For those that are
considered exempt from overtime, analyze their salary levels. For those that fall below about $40,000 in
salary, it is almost certain that DOL will raise the salary level above that
point, so those positions should be flagged.
For those that fall between $40,000 and $50,440, determine the impact of
raising all salaries to the higher amount.
While no raises need occur until the final rule comes out (and there
will be a 60 day comment period, at least) after this analysis the employer will know the
financial impact of the possible changes and can be prepared to take quick action.
·
Analyze how many hours a week the
employees below the higher level are working.
For those that may not be raised to the salary level imposed by the final rule, determine the
potential cost in overtime.
·
Examine current rules on overtime, and
make sure employer policies on seeking permission are clear.
·
Begin preparing communication with all
employees to assure them of their value to the company, while explaining the
potential impact of the new rules on each class or position.
No comments:
Post a Comment