855-447-4111 glenna@glennahecht.com

We are only FOUR short weeks away from the changes in the new overtime regulations.
-For those of you who have not started to think about this…now is the time!
-For those of you thinking the election may change things…think again the new president isn’t sworn in until 2017!
-For those of you hoping for a reprieve from Congress or State Legislators… don’t wait, as this may not occur by the December 1st deadline.

The key message is to BE PROACTIVE as this is an important change that could affect your business. On Dec. 1, the federal annual salary threshold for employees exempt from overtime pay will double, increasing to $47,476 from $23,660. Employees who make less than the threshold must be paid time-and-a-half for any hours worked beyond the 40-hour workweek. If employers want workers earning below the threshold to remain exempt from overtime pay, they must bump these workers’ salaries to at least $47,476.

Many employers believe that this is only a compensation change, but in reality there are other areas that must be reviewed. Here are some additional considerations since our original post in September, 2016.
– Compensation rate; Determine the salary for your current employee and then an hourly rate for 40 hours plus any hours typically worked over 40. You may want to standardize the numbers of hours worked to be able to regulate your labor cost. For example, you may determine all assistant managers work 45 hours that includes 40 regular hours and 5 overtime hours. Once determined, communicate the hourly wage rate and total calculation to the employee.
– Tracking hours; Determine your company policy and process for any hours worked beyond those stated above. Reinforce that all hours must be recorded and will be compensated. How does the employee gain approval for additional hours worked? Does the employee have to contact his/her supervisor for approval? How will those hours be recorded and approved? There are a lot of “what if” questions and hypothetical situations to be considered. It is important to be proactive and identify these potential concerns as your employees want to know how to successfully deal with this change.
– Bonuses and Benefits; Ensure your bonus program doesn’t have “mixed messages”. If you compensate based on meeting a labor target, the employee may underreport hours to achieve bonus, this is a new consideration and must be reinforced. When bonuses are calculated based on wage rates, i.e. a percentage of pay, you must take overtime hours into consideration. Determine other benefits that may be impacted by this change, i.e. 401k contribution based on wages, awards based on hours worked, etc.

Plan to spend time on the strategy and execution of this change to “do it correctly for your organization: Rely on outside support to help you make key decisions and prepare in advance for all aspects of the change that is coming.