With the U.S. Department of Labor’s new overtime pay requirements currently up for notice-and-comment, businesses are scrambling to stay ahead of any potential changes in the event of a final rule. By raising the overtime salary threshold from under $24,000 to just over $35,000, over one million new American workers will be eligible for overtime pay. The move is likely to leave some employers a bit unnerved.
The ruling’s potential impact businesses will be extensive — affecting employee compensation, corporate policies and businesses costs. A daunting prospect for U.S. companies, but organizations simply implement these five best practices to handle the change.
Get a head start. Businesses can stay one step ahead of the curve by scrupulously analyzing the new ruling and all potential changes. Begin by defining who is affected, and use this information to come up with a game plan. By exercising due diligence and anticipating any obstacles, businesses can be prepared from the outset.
Communication is key. Stay transparent and open to communication with employees — those who are both exempt and non-exempt — at every step of the process. Businesses must address any potential implications to morale, compensation and employee management. Wage and hour regulation is no joke and keeping the workforce engaged and up-to-date will be the most reliable safeguard against any legal repercussions. Finally, remind everyone that this ruling is not yet carved into stone. As with the original attempt in 2016, the proposal still has the capacity to be delayed, blocked or simply abandoned.
Become aware of how all company time is spent. Currently, the norm is tracking only those hours worked by non-exempt employees, but it may be time for a change. By tracking all employee time, including exempt employees, businesses can unlock a wealth of information to help facilitate the transition, and understand their company better going forward. Promoting a healthy work/life balance, ensuring leave eligibility or confirming accrued PTO, only further the benefits of tracking time for those exempt from overtime. Remote and mobile workers also play into this idea heavily, as their numbers continue to grow, and the need to monitor their working hours more accurately becomes especially significant. With a reliable time tracking system, a record of all employee time can support, clarify and inform businesses on any wage and hour hiccups down the line.
Use actual employee duties to define status. Although the duties test is set to stay the same under the new proposal, it shouldn’t be overlooked this time around. With time tracking in place, detailing employee activity is just one more step in the same direction. Look at their activities: do the company’s definitions of salaried and exempt make sense as they are now?
Delegate to compliance gatekeepers. It’s time to embrace change management, and a good place to start is by distributing the workload for some especially relevant concerns — such as maintaining compliance. While everyone should take care to observe compliance, assigning supervisors to specifically monitor adherence in various departments can streamline the process. A system providing real-time visibility into pay, hours and time-off can highlight any red flags ahead of time to gatekeepers, and head off any potential legal problems at the pass. By collaborating with other employees, these gatekeepers can build a protective barrier from compliance violations on every side.
Major changes like the new overtime proposal present numerous considerations from a technology, business and legal standpoint. Knowing how to face them can alter the course of your business’s ongoing success. If nothing else, the 2016 proposal attempt taught us that nothing is absolute until a final rule, so keep an eye out for any future statements. In the meantime, by learning the changes, understanding the impacts and discerning what steps to take, businesses can march forward regardless of what lies in wait and even emerge a better organization from it.
