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Businesses should be prepared for new OT rules

Expert offers three steps to help companies comply with regulations

Barring a last-minute delay, upcoming changes to federal overtime regulations, one of the most-discussed business issues of 2016, are a little under three weeks away from taking effect.

Employers have until Dec. 1 to comply with the regulations, which will double the salary level, from $23,660 to $47,476, under which employees working more than 40 hours a week must be paid overtime.

With time winding down, what should business leaders be doing to make sure they’re ready to comply?

An expert on the upcoming overtime changes, attorney Jill Welch, said that by now, employers — including those in the public and private sector, nonprofit and education ­— should have completed three top steps on their to-do “checklist.”

They are:
1. Have exempt employees whose salaries fall below $47,476 a year keep a record of hours worked, including off-hours time on electronic devices.

2. Review job descriptions for these exempt employees, and categorize their exempt versus non-exempt duties.

3. Analyze the financial impact for your organization of (a) bumping up the salaries of exempt employees to or above the $47,476 threshold; (b) transitioning exempt employees to non-exempt status; and (c) hiring additional employees to take on tasks and spread out hours.

Large employers with many non-exempt employees and set schedules may not find the overtime rule changes difficult to implement, said Welch, of the law firm Barley Snyder in Lancaster.

“But for many small businesses and nonprofits, where exempt employees may head up a department and wear many hats,” she said, compliance “will require changes to staffing and policies to maintain levels of service.”

And while the U.S. Department of Labor has called it a “myth” that employees will view being moved to non-exempt status as a demotion, Welch disagreed.

OT rules: What’s the difference?

The terms can be hard to keep straight when you are trying to determine whether employees are due overtime pay. Here is a quick guide:

Exempt: Not entitled to overtime pay. Generally must be paid on a salaried basis at a rate of more than $455 per week, a figure that is rising to $913 per week after Dec. 1. Must meet certain tests regarding their job duties, which vary by job type but include managing at least two other full-time employees, having authority over hiring and firing, and performing work requiring advanced knowledge. Examples include lawyers, doctors, farmworkers on small farms and mechanics employed by automobile dealerships.

Non-exempt: Entitled to overtime pay, which is time and a half for all hours worked over 40 in a workweek, and the federal minimum wage. Do not use personal discretion and independent judgment at least 50 percent of the time in their job. Perform work involving repetitive operations with their hands and physical skills, or in the interest of public safety. Examples include carpenters, electricians, construction workers, police and firefighters.

– Jennifer Deinlein, contributing writer

“For some employees this perception is real, and companies have to manage this employee-relations concern,” she said.

For business executives, “what likely remains (now) is the communication of these changes to staff across the board, and the roll-out of policy changes for the ‘newly non-exempt’ who have not had to track their time, or concern themselves with when and where they work,” Welch said.

Employers, the attorney added, are focusing on policy changes in the areas of: working from home, taking work home and documenting telecommuting arrangements; working through lunch; limiting responding to phone calls and emails outside of regular work hours or establishing an email curfew, except in emergencies; setting schedules in advance; and addressing travel-time arrangements.

Also, business leaders are keeping an eye on remaining legal challenges to the overtime rule, which was announced in May.

President Obama has vowed to veto any legislation delaying its implementation.

Attorney Welch, in her discussions with employers, has found there to be “support for an increase to the salary threshold, just not such a significant increase all at once.

“So taking steps now to analyze the impact of the rules, and review job descriptions and policies, will be helpful down the road whenever the changes take place,” she added.

David O'Connor
Dave O'Connor covers York County, manufacturing, higher education, nonprofits, and workforce development. Have a tip or question for him? Email him at [email protected].

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