Employers who mistakenly believe that overtime should be avoided fail to realize a cost-saving strategy. The key is to manage the usage of employees working more than 40 hours each week. To do this, it is important to measure the impact overtime can have on the organization.
First, you will need to determine how many employees in the organization actually qualify for overtime according to Massachusetts labor laws. Next, assess how much overtime is currently worked.
It is also beneficial to identify which category employees fall under.
- Occasional overtime does not strain the labor budget and often proves the most effective category.
- Expected overtime occurs when employees rely on or expect overtime in their regular compensation. This may require setting an overtime budget for each employee while allowing them to manage when to use it.
- Heavy overtime can become a cost burden. This may require raising salaries that meet or exceed a set threshold. You avoid overtime pay running up labor costs and employees feel they are receiving fair compensation.
Some departments may combine these strategies as needed to have the most cost-effective management plan for overtime usage.
Manage and Track Changes to Overtime Rules
Overtime rules are not difficult to understand but can prove challenging to track even if your company uses overtime sparingly. With too many moving parts, managing everything in a spreadsheet only makes things harder.
The better way to track extra hours is with a scheduling tool that keeps pay rates and positions current. Department managers need an electronic platform to manage overtime based on Massachusetts’ specific laws.
Setting weekly thresholds serve as an additional layer. Managers and employees will know when time worked beyond normal work schedules are approved or not allowed.
Automatically Track Overtime Usage
Time and attendance software works by allowing you to set default pay periods and pay rates based on departments and job types. Managers have full access to edit their department rosters as necessary. They can:
- Add new hires
- Terminate employees
- Set pay rates
This information is synced with your clock in and out system to keep track of hours worked. Data is also useful for payroll processing with third party vendors.
Issues with overtime scheduling are not transparent with a spreadsheet or communication between department heads and team leaders. Small departments might feel comfortable relying on an antiquated system.
However, when you have 50-plus employees, you will get more accuracy with an electronic system. Information is stored into one place and will send alerts to you and the employee who is about to go into overtime status.
Alerts are good for tracking daily work schedules and labor hours. An overtime report, however, provides more detail to analyze overtime usage. Your managers can determine costs per day and week.
This is a powerful knowledge that helps managers pinpoint areas where overtime is costing too much. Scheduling adjustments make it an easy fix to avoid cost overruns. Reports offer additional insight for hiring needs.
If too much overtime is going to the same employees, managers can alter schedules or offer shift work.
Overtime Warning Report
Generating an overtime warning report is critical to preventing too many hours beyond normal shifts. A report like this is easily configured based on employee name, job code, and schedule.
Reports can be distinguished between scheduled hours, actual hours and overtime hours, along with dates.
Communicating New Overtime Rules to Salaried Workers
Cultural impact is one thing employers must be aware of when applying the new overtime rules according to Massachusetts labor laws. Higher salaried employees who are now eligible for overtime pay must track their own hours.
If nothing else about their job changes, i.e. responsibilities, work hours, doing this might feel like a demotion to some employees. Others might feel less valued because they now track their time.
Now, you are faced with combatting lower morale and a sense of lost prestige. There are ways to overcome the inevitable stigma of salaried employees tracking their time. The goal is to empower employees while emphasizing time tracking is not synonymous with their importance.
Communicate with employees:
- Their salary status has not changed. New rules from the Department of Labor do not require paying them by the hour.
- Their workday will not necessarily change. Some employees will simply receive additional pay when they work over 40 hours in one week. Time tracking is used as a benchmark to know when they hit that point.
- They are still in control of their work schedules. The new rules do not dictate a specific schedule. Salaried employees who are mobile or on flex schedules in this category will still control where and when they work.
- They can manage their time. Supply employees with mobile connections or web portals to track their time without an in-office time clock, which has a stigma for professional workers.
- They will receive overtime notifications. You can setup automatic alerts for employees and managers so they know when they are approaching overtime pay. Managers can stay on track and budget.
Millions of workers qualify for overtime pay now that the minimum salary threshold is in effect. This leaves organizations like yours looking for cost-effective labor strategies to get the most out of this new requirement.
Shifting salaried employees to a time tracking system also comes with many advantages. Communicating the importance of the new rule is a balancing act between compliance and cultural complications.
Explain how any changes will affect your employees’ workday and status. Use of self-service technology empowers them to keep track of their time. You can still send automated alerts if overtime hours are available or if they are about to exceed limits for that pay period.
Employees who are used to receiving overtime during every pay period will also have to adjust. That is why developing an overtime management plan is essential to ensuring your system aligns with government and business needs.