The U.S Department of Labor proposed new rules will be published in July 2016, with an effective date of 60 days later. The proposed changes will affect businesses of all sizes, particularly those in the retail, hospitality, and manufacturing industries who have a high number of seasonal employees. In order to comply with the new regulations, employers will need to have an accurate time and attendance tracking solution that will help them manage all their employees’ hours, run real-time reports, and unify the tracking to their payroll system.
Under the current proposal, the salary limit for workers eligible for overtime pay would increase from $23660 a year to $50400, making millions of U.S workers eligible for overtime pay who had previously been exempt. This would potentially increase the incomes of 5 million workers because that is the amount that would need to both be reclassified as non-exempt and paid overtime, or receive salary increases to meet the new minimums.
How can employers prepare for these changes?
1. Collect and Analyze Salary and Pay Information on All Employees
The key to collecting and analyzing this information is to identify all employees classified as salaried exempt who earn less than $50,400/annually. Breaking this down further it would be beneficial to know the total number of employees being paid salaries between the current minimum of $23660 and the 2016 minimum. The other two main things employers should be looking at in the analysis is how many employees they currently have being paid above the proposed threshold and how they may have to increase their salaries in order to maintain fairness and retention within the organization.
2. Job Duties and Hours Worked Analysis
The U.S Department of Labor will also be modifying the job duties test for some of the white collar exemptions and a full analysis of current job duties and actual hours worked will help employers prepare for them proposed changes. By collecting all this information, employers will be able to determine whether they need to reclassify certain employees and whether any duties need to be modified to comply with any new job duties tests.
3. Propose Potential Changes
Based on the proposed changes, employers should consider what they will have to change based on their analysis in order to comply. Will they be reclassifying exempt employees and paying them hourly? Will they be changing the job duties? Will the salaries of exempt employees be increasing to meet the new minimums? Is this the time to change time tracking practices and systems to better keep up with the changes? This is the time to find some solutions that would fit the budget and comply with upcoming regulations.
4. Potential Costs
Before any changes are implemented, the best thing would be to calculate the various combinations of changes and all the potential consequences. This will provide employers the best understanding of the effects of these changes on the organization. Employers should take into consideration both the monetary and non-monetary outcomes of changes. The cost is typically the biggest factor when dealing with such a big change but employers should remember that reclassifying employees and changing job duties may in fact have a worse effect on the company as a whole. The key here is to identify the most effective changes to make that will keep the budget and employee satisfaction in check.
5. Prepare The Organization for Changes
Once the employees, duties, and all potential solutions are fully analyzed and a way forward is chosen to deal with the regulation changes, the employers need to get all their employees onboard. Everyone needs to be made aware of the potential changes and how the employers are going to deal with them. This way they are given time to process these changes and respond with any issues that arise. Getting everyone informed early in the process is key to implementing any organizational change effectively.