As many of you know, new overtime rules under the Fair Labor Standards Act (“FLSA”) are coming. Given the basic economics of the workplace, the new rule—which raises the salary threshold under which an employee is entitled to overtime—is just as likely to create less work for individual employees as it is to increase the amount of overtime American employees collectively earn.
The main change in the FLSA rules, effective this Dec. 1 is an increase in the minimum weekly salary to the 40th percentile of weekly earnings for full-time salaried workers, based on the Bureau of Labor Statistics (BLS) data. Under the new rule, anybody making a salary of less than $47,476 ($913 a week) will automatically qualify for overtime pay when he/she works more than 40 hours a week. This is twice the previous overtime pay threshold of $23,660 a year, which had remained unchanged for more than a decade.
Employers need to consider the rule, its impact on labor costs, and the best way to respond.
With that in mind, here's 4 simple things you need to remember as you'll likely have people not used to being hourly, working past 40 hours:
--You can and probably should ask folks to get overtime pre-approved. It's messy, because you've asked a lot of these people on the professional and managerial exemption to run their own shop and desk. Now they're hourly, and we're telling you to ask them to get OT approved. Too bad - if you want to get fiscal control, asking people to pre-approve OT is something you have to do. The good news this puts inherit pressure on them (assuming OT is not a preferred outcome for your company) to be more productive with the hours they have.
--When non-exempts work OT without approval, you're required by law to pay them. Doesn't matter if you have pre-approval as you're process or not, if they work past 40 hours, you have to pay them - even if they didn't get the OT approved. The tricky part here is why you have to pay them, you can put them in progressive discipline for not following the OT pre-approval rule you have. So if there's a problem with pre-approval, pay them and figure out when to send the message.
--Remote work by a lot of your professional workers under the threshold just got trickier. It's true - the time they reply to work emails outside of work needs to be compensated. So you'll need to tell them that and set the expectations on how you want them to handle that. Good times.
--Most professional grade workers still want to be exempt rather than non-exempt. Sure they want to get paid, but they'll hate the hour counting. Keep this is mind as you communicate what's up... And if they hate it, have them write a letter to their congressman.
Remember some of these basic things, be open and honest in your communication with employees moving from salary to hourly status and you'll be fine. Good Luck!