What impact will the new overtime regulations have on your organization?

. . . so little time.

written by Mercer PeoplePro guest writer Gerry Geier

By now, I'm sure most of you have seen the recently published overtime regulations. But just in case, here are some brief highlights:

  • The annual salary threshold for exempt positions, increased from $23,660 to $47,476.
  • The Automatic Salary threshold increases every 3 years
  • The standard duties test is unchanged
  • Highly compensated employee exemption is increased from $100,000 to $134,004
  • The effective date is December 1, 2016.

Considering that these are major changes, with legal advice and interpretations and many questions still to arise, the December 1st compliance date, while six-months away, doesn't provide much time.

To help get you started, here are some thoughts to consider:

What impact will the new regulations have on the organization?

  • Labor cost increases — ability to pay, impact on salary structure and benefit offerings?
  • Might reassignment of work or elimination of certain positions, adversely effect future advancement?
  • How will the changes affect succession planning?
  • Will eligibility for life insurance, disability, or waiting periods for benefits change?

What impact will they have on employee morale?

  • What effect will they have on employees who become non-exempt?
  • Will the changes result in a loss of perceived status; punch the time clock mind-set, less workplace flexibility for appointments or family issues?

These proposed changes have been on the radar since July 6, 2015 when first announced by the DOL. Hopefully, in anticipation of the proposed regulation changes companies have had the opportunity to evaluate their situation. But let's be realistic, not all companies have the resources to work on these issues.

New Overtime Regulations — so many questions

Here are some thoughts to evaluate the impact on your business. While they are not as detailed as you will need, they provide a good a starting point.

  • Work to obtain a clear understanding of the new regulations — attend seminars, speak with your attorney
    • Identify the employees within your organization who will be effected
      • Determine the financial impact
      • Can you afford an increase in labor costs?
      • How might it impact the organization?
    • Evaluate reclassification or elimination of positions to enable compliance
      • Rewrite job descriptions — reassign job duties
      • Consider placing limits or eliminating overtime
    • Identify the financial impact of your decisions on reclassification.
      • What, if anything, will the impact have on salary and benefits?
    • Develop a strong communication plan as employees will want to know how the change impacts them sooner rather than later
      • Be sensitive and transparent as any changes will likely be considered “bad news”
      • Consider ongoing communication as you progress to the compliance date.

I'm sure you have many questions of your own so please stay tuned for ongoing interpretations and clarifications.

In the meantime, if you're a small or emerging business and would like some expert, on-demand guidance on employee policies and best practices, we're here to help. We'll even give you a one-hour consultation, FREE. You can schedule a free hour of time with me at Mercer PeoplePro, or you can reach me by email at Gerard.Geier@mercerpeoplepro.com I look forward to speaking with you.

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