With new overtime rules approaching, organizations are ramping up training on what a business leader described as “one of the largest issues impacting the way businesses operate in the last 10 or 15 years.”
Those organizations include the Lancaster Chamber of Commerce & Industry, which last week hosted 160 regional leaders from a wide range of for-profit and nonprofit businesses for a session dubbed “Overtime 101.”
Tom Baldrige, president and CEO of the Lancaster chamber, said the business community seems to be breaking into two camps – owners “who are aware and concerned, and those who are unaware and potentially at risk for not adjusting to what this requires of them.
“This is a critical business-operations issue,” Baldrige said.
A number of legal experts and business organizations have been stepping up their education efforts since the new overtime regulation changes, which take effect Dec. 1, were announced in May.
And the Lancaster chamber is among those providing education, saying it wants its members to be aware of the changes and how to begin planning now for them.
Experts agree it’s a top subject these days for leaders in business, as Baldrige noted.
Among other changes, the new regulations 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, while the national threshold for “highly compensated” employees will increase from $100,000 to $134,004 annually.
All of that leaves business owners and managers with decisions to make.
Probably the most important one is deciding whether to increase the salary of a person who now earns less than the $47,476 threshold, or to pay them less and budget for potential overtime, paid at a rate of time and a half.
A Lancaster attorney and one of the seminar leaders, Howard Kelin, raised another possibility during a breakout session at Wednesday morning’s two-hour seminar:
Say you have an employee who now makes $800 a week – although he or she works 45 hours a week, with no overtime – putting the person under the new overtime threshold as of Dec. 1. How about reducing the employee’s salary as of Dec. 1 to an amount that, with the extra overtime figured in when the changes take effect, equals what they are now earning, Kelin wondered.
That could be a viable option for cash-strapped nonprofits, Kelin said.
The attorneys who led the seminar emphasized, as one said, that there’s “no one-size-fits-all solution,” and that each company’s situation is different.
“The fact that people are willing to dedicate (time) to this topic is indicative of its significance, but we’re not done today, either,” Baldrige said, pledging to “offer as much training and connections to the answers as we possibly can” between now and Dec. 1.
The changes are just three months away, and a Lancaster lawyer who spoke during Wednesday’s seminar, labor and employment attorney S. Whitney Rahman, emphasized that company officials not wait until just before Dec. 1 to begin planning for the overtime changes.
“It’s important because this threshold amount has been raised (approximately) 100 percent” for most employees, “so obviously there are going to be a lot of people who are exempt under the old salary threshold who are not going to be exempt come Dec. 1, and companies just have to plan for that and decide how they’re going to address it,” she said.
Some numbers to consider from the seminar regarding the new regulations:
1. When the Fair Labor Standards Act was introduced in 1938, the minimum wage was 25 cents an hour.
2. The salary threshold under which workers are considered eligible for overtime changed only once from 1975 to 2016, a 41-year period.
3. The salary threshold, after the increase on Dec. 1, will be updated every three years, with the next increase to take effect Jan. 1, 2020.
4. Employers may still pay their employees on a biweekly basis on Dec. 1, and the salary exemption level for part-time workers is the same as for full-time workers ($913 a week), the federal Department of Labor has said.
5. An estimated 4 million white-collar workers will become overtime-eligible because of the increase in the salary level, the DOL has said.