To comply with the Department of Labor’s overtime legislation, all employers must decide whether their salaried employees will be exempt or non-exempt from overtime by December 1st of this year. The DOL predicts the new regulation will cost private employers in the neighborhood of $1.8 billion in 2017.
There are four basic scenarios that employees will encounter in the coming months:
- They will be paid the exempt base salary of at least $47,476 per year
- They will be reclassified as an hourly employee and eligible for overtime compensation
- They will be kept at their current salary level and payed for any overtime hours
- Their typical overtime hours will be factored into a 40-hour work week to convert their current salary base into an hourly wage
Although these four scenarios differ greatly from one another, employers can navigate each one of them effectively if they follow the corresponding four phase engagement process.
Phase I – Employee Reclassification Checklist
- Initiate a formal review of job descriptions to confirm exempt or non-exempt status
- Review employee benefits, eligibility, and plan design
- Retool employee handbook and policies (meal breaks, overtime, working from home, etc.)
- Analyze workload and overtime alert procedures to minimize overtime exposure
- Firm-up hours, tracking expectations, and engagement goals for exempt supervisors
- Restructure commission and non-discretionary bonus impact (only 10% qualify as salary)
Phase II – Employee Perception
- Foresee various reactions from employees
- Acknowledge that some employees will see this as a demotion, while others will see it as beneficial
- Combat the negative stigma that comes with being salaried and then having to track hours
- Anticipate negative employee feelings and determine how the employees, who have converted to hourly, fit within the new structure
Phase III – Employer Messaging
- Propose an introductory meeting prior to December 1st to notify employees of impending changes
- Address the group as a whole concerning fairness and equality issues
- Encourage follow-up communications and be prepared for informal employee inquiries
- Issue the new policy with an updated employee handbook
- Sample pay-stub layout for each affected employee
- Reinforce employee value to company operations, explain rule is mandated by federal law
- Update Job Description and Employee Acknowledgment signature
Phase IV – Employer Opportunity
- Increase employee transparency with hours tracking
- Improve performance reviews, productivity, and job cost
- Minimize the risk of missing important issues that typically come to light for hourly employees
Although there is a lot of negative buzz concerning The DOL’s new overtime legislation, there is potential upside for employers. The DOL has prompted the need for a formal reset of how time is tracked and how jobs get done. If employers are able to comply with this legislation and minimize employee unrest simultaneously, they will be able to increase productivity and augment their bottom-line.
If you have any questions about this new overtime legislation or would like to talk with an expert to learn how Mosaic can help you navigate it successfully, call (303) 645-4270 or visit www.mosaices.com.