Many employers may have breathed a collective sigh of relief last week when a Texas federal court placed an injunction on the Department of Labor’s overtime rule revision, effectively halting it from taking effect on Dec. 1. When in full effect, it was set to impact almost five million workers, extending the overtime protections already in place for the non-exempt employee. Under this revised ruling, the salary threshold for exemption would increase from $23,660 to $47,476.
Although the injunction casts doubt on whether the revision will actually go forward, it is likely that the threshold will increase on some level. Many formerly exempt workers would be reclassified as non-exempt employees. Along with this change, come a number of worries for workers.
Implementation of the new rule may be imminent for the newly classified non-exempt employee. As a result, many employers have begun assessing the new regulations. It is important to determine how they impact their business. It is also important to assess how it affects their workers. The rules are pretty straightforward in many respects. However, there are a few issues that may arise when changing an employee’s status.
Taking the time to make the change easier on everyone is best. This requires some time and effort from the HR department.
Handling the Reaction of Status Changes
First things first. Employers must deal with the reaction from employees. Those who had salaried positions may feel as though they are being demoted. Many employees who have never punched a timecard are now faced with this task. They have to keep track of when they come in, take lunch, breaks, and more. For some, this is an interruption to their entire day.
Many may wonder how they can ever complete their work. Especially those who work for companies that have a strict “no overtime” policy.
The good news is, employers can take time now to begin explaining the changes. Preparation now can help employees prepare for what’s to come. While timecard changes are inevitable, they don’t have to cause a sense of dread.
Focus on the Positive
There are some good things to consider. Now, many salaried workers are going to receive compensation for their after-hours work. In the past, many salaried workers stayed at work late. Others, took work home with them. This was normal and something paid for in their salary.
When the new rules are in place, this is no longer allowed. Employees must track all time worked. The overtime pay received is typically time and a half of their normal, hourly wage.
Not all non-exempt employees have to become hourly workers, though. This is not a stipulation of the new law. However, if they work over 40 hours per week, they have to receive overtime premiums. This is typically based on the per-hour rate of the salary they receive.
Recommendations for Implementing the New Non-Exempt Employee Rules
Implementing the rules is not required right away. There is a grace period. However, the discussion among employers and employees needs to begin now. When employees know what to expect, they don’t have to worry as much.
Consider Alternative Compensation Options
There are several ways you can structure compensation. This includes:
- Keeping the exemption intact by increasing the employee’s salary.
- Paying a “salary credit” to affected employees to keep their exempt status.
- Convert the salaried non-exempt under the regulations of the “fluctuation workweek.”
Keep in mind, many of these alternative compensation methods are often complex. Work with an attorney to determine what structure is best.
Make Clocking in and Out Easy
Change is difficult. Employers need to take steps to make it easier on their employees. There are a number of ways to do this.
One option is to implement an easy to use time tracking system. Countless software programs allow employees to clock in and out directly at their computers. This minimizes the need to walk to the time clock or to manually track hours worked.
Keep in mind, timecard changes can present issues for some employees. This applies especially to those who have never used a time card in the past. It is a good idea to implement the new rule now. This ensures everyone understands before the rule is considered law. It can also help make sure employees know how to accurately track the time they work.
Reduce the Temptation to Work at Home
Many salaried employees have company devices. This includes phones, laptops, tablets, etc. These are often used for working at home and after hours. Working at home or after hours can lead to overtime. To reduce the amount of overtime paid, many employers may decide to recall these devices.
However, this can seem like another unwanted blow to some employees. In some cases, this is not the best course of action. If this is the case, ensure the rules for working after hours are clearly understood.
Smooth Integration of the New Non-Exempt Employee Status
The new rule presents a challenge. Many HR departments are scrambling to handle the requirements. After all, it is affecting millions of workers across the country. Explain the new rules now. Starting as early as possible gives everyone time to adjust. The tips here can also help reduce the potential for excessive overtime pay being spent.
While some employees are going to find this rule a bit off-putting, the approach undertaken by management can make the transition process much easier. In many respects, this ruling is good for the employees and employers. This is a key factor to focus on when implementing the changes.