Happy Halloween!
Yes, All Hallow’s Eve is upon us today, which gives organizations exactly 31 days to comply with the largest Fair Labor Standards Act (FLSA) overtime regulation change in many years. This change is estimated to affect more than seven million businesses and non-profits nationwide, as many employees previously paid on a salary basis will now be non-exempt, and employers will be required to track overtime and pay time-and-a-half for hours above 40 in a workweek. Scared yet?
Time is Running Out
When the change was announced in May of this year, I wrote a series of blogs detailing the new rules, time-tracking solutions and tips on communicating the changes to employees. For the leaders who have been busy since then—making quarterly sales goals, or raising funds for non-profits, or managing projects to completion—and haven’t tackled this, time is running out. Seriously, it’s time to deal with it. Now. So let’s get started.
First, what are the new rules, exactly?
For your salaried employees, the minimum to qualify for exemption status moves from $23,660 per year ($455 per week) to $47,476 per year ($913 per week). Employers can apply bonuses and incentive payments up to 10% of the new threshold. Additionally, the amount you have to pay someone to fall under the “highly-compensated” exemption rises from $100,000 per year to $122,148. Under the new rules, anyone paid less than $47,476 is classified as non-exempt and is eligible for overtime. So if that employee works one minute longer than 40 hours in a week without be paid time-and-a-half, your organization is out of compliance and in danger of a claim for back wages and fines. Ouch!
Second, how do we track the hours?
If you don’t already have an option with your current payroll vendor, there are many solutions out there. You can find time-tracking software that is customized for a specific industry, mobile-friendly and even inexpensive. You may find that instead of making things more difficult, incorporating these systems into your operations makes life a whole lot easier. For example, some solutions will alert managers when an employee has logged in and whether they’re on task. Many can be managed by an app on your phone. Working with employees and managers to use the new system correctly and consistently is an important part of the success, which leads us to the next step.
Third, how do we communicate all of this?
You’ll also need to decide when and where to communicate this information, but start by having a plan. Once you have decided who is affected, how you are going to pay them and which time tracking system to use, do the following:
- Get organized with a schedule, timeline and participants’ availability.
- Communicate verbally and in writing to ensure it’s been documented, especially if you have a strict, no-overtime policy.
- Have individual meetings and prepare for questions and concerns from employees.
- Be clear about why this is happening (Hint, saying it’s the Department of Labor forcing you to do it may not go over well).
- Consider hiring experts.
This may seem overwhelming, stressful and anxiety-producing, not to mention scary. We are here to help you with any or all stages of this process and navigate a tricky situation.
