With changes to the federal overtime regulations coming in less than five months, everyone has been talking about the new salary threshold of $47,476.
But there is another factor in the pending new rules for business owners to consider, York attorney Michael King said at a recent seminar.
Owners also should take into account job duties, King said.
“The big takeaway is, you need to make sure that the people you are treating as exempt (from the regulations) are exempt. Because there are a lot of situations where that’s not the case,” he told some 60 business leaders at a seminar held by his firm, Stock and Leader, at the Country Club of York.
“You start with the salary threshold, but you don’t stop with the salary threshold.”
King was one of three attorneys from his firm at the seminar discussing the upcoming changes. Also speaking were attorneys Mark Evans and Walter Tilley.
To prepare for the Dec. 1 effective date, they recommend employers take these steps:
1. Determine which exempt employees are now earning below the new minimum salary level.
2. Review job descriptions for accuracy and to ensure they have appropriate wage and hour classifications based on the current “duties test” of the position.
The “duties test” means that an employee is not exempt simply for being paid at or above the $47,476 threshold. The employee’s position also must qualify as exempt under one of the various categories of executive, administrative, professional, and the like, the attorneys said.
So passing the “duties test” means that the job duties fall within the established regulations for the specific category in question, King said.
3. Review all positions classified as exempt, even those earning more than $47,476 a year, to determine if the positions meet the “duties test.”
King added that reviewing what a person does versus their job description is key: “With the speed of change that we have today, the job that somebody had last year is not necessarily the same job, in terms of duties.”
The new federal overtime regulations will double the salary “threshold,” from $23,660 to $47,476, under which employees working more than 40 hours a week must be paid overtime.
Overall, businesses are expected to adjust to the rules by having fewer employees or fewer full-time ones, by increasing the salaries of some just below the $47,476 level or by reclassifying those who are now salaried and putting them on an hourly basis.
The attorneys with the York firm also outlined the most likely problems to arise with the new regulations:
1. The potential for significantly increased labor costs. Employers may need to hire more employees to offset potential overtime costs, but this would increase costs for health benefits.
2. It may reduce workplace flexibility, and may harm employee morale due to “reclassification of employees.”
3. The perceived elimination of career opportunities through the loss of exempt status.
4. Employers may struggle to get work done if they have budget caps on the amount of overtime available to employees after Dec. 1.