Different Approaches to Complying with DOL Overtime Regulation

Posted by Julee Nunley on Wednesday, November 16, 2016

The deadline for complying with the Department of Labor’s new overtime regulation is December 1, which is just two weeks away.   Technically, the true deadline is the first payroll period that includes December 1, so, depending on your payroll schedule, your organization may be impacted even sooner.

The new Presidential administration may entertain some changes to the new overtime rule, such as a small-business exemption or eliminating the automatic increases.  However, such action is not guaranteed and would likely take considerable time to take effect.  Therefore, the Society for Human Resource Management (SHRM) recommends that employers continue to plan to follow the rule as written.

As you prepare for complying with the law, it is important to remember that not only must the minimum salary level be met, but employees must also meet the standard duties test to be exempt from overtime.   The three types of exempt duties are executive, professional, and administrative.  The Department of Labor website provides detailed explanation of each of these categories on its Wage and Hour Division page.

The HR manager for an organization with which I am personally involved did a thorough analysis of her organization’s staff and came up with a few different approaches to complying with this change.  I asked to share her analysis both because I found it insightful and because it demonstrates creativity in developing solutions that would benefit the organization as well as its employees.  Her suggestions for managing this change fit into four basic categories:

  • Manage hours worked to avoid overtime - This was the solution for most of the impacted staff and makes the most sense for employees whose salary is well below the threshold or who do not meet the standard duties test.  Having standard procedures in place for tracking time and setting clear expectations for work conducted outside the office (including checking email), will be essential for successfully managing hours.
  • Raise salary to close the gap between current salary and threshold - This approach works for employees whose salary is near the threshold and whose duties fall into executive, professional, or administrative categories, as defined by the Department of Labor.
  • Establish a fluctuating work week - This solution was suggested for staff members who travel or whose schedule is impacted by the organization’s busy season. Information on how to properly implement a fluctuating work week can be found on the North Carolina Department of Labor website.
  • Make employee a supervisor - This solution allows an employee who meets the salary threshold to also meet the duties test.

The options for compliance go beyond simply paying overtime.  Evaluating the unique situation of your organization and your employees is essential to finding the optimal solution.

(If you would like more information on our cloud-based time and attendance solution, please feel free to contact Megan Barnhart at megan@outfitters4.com.)