Preparing for New Overtime Law

Posted by Julee Nunley on Monday, October 10, 2016

October is here and this year there is more to start preparing for than the holidays.  Changes to the overtime provision of the Fair Labor Standards Act are currently scheduled take effect on December 1; therefore, the time to ensure compliance with the law is drawing near.  

In recent months, the new overtime provision has been challenged by multiple states and by business organizations. Additionally, the US House of Representatives recently passed a bill to delay the date that rule takes effect.  At the writing of this post, however, the lawsuits have not yet been resolved and the House bill is not expected to be written into law.  Therefore, nonprofits should continue to prepare for the rule as it currently stands.    

We first posted about the changes in the overtime provision on June 20, with a broad overview of the coming changes (New Overtime Rules and North Carolina Non-Profits.)  That post included the following guidelines for complying with the law:

  • Assess the impact to your organization by determining which employees will no longer meet the salary test and how much overtime these employees typically work.  

  • Review job descriptions for those in executive and administrative roles to ensure compliance with the duties test.

  • Determine your approach for remaining in compliance.  Options include salary adjustments, restructuring of duties, and beginning to pay overtime to affected employees.

  • Reclassify the necessary employees from exempt to non-exempt, keeping in mind that these employees may still be paid a salary and do not have to be converted to hourly pay.

  • Deliver message to employees about changes.  Communications with employees should include setting new expectations regarding time-tracking, hours worked, and work conducted away from the office (including answering phone calls and e-mails.)  It is also important to be conscious of potential morale issues.  Employees who see their roles as managerial, but do not meet the salary or duties tests, may feel as if their role is being diminished.  On the other hand, many employees may appreciate the opportunity to either work less or be paid for their overtime.

  • Ensure that time-tracking mechanisms are in place.  We recently attended a presentation by an attorney specializing in employment law who emphasized that an employer’s biggest area of exposure is in not tracking hours. Maintaining records of hours worked is the employer’s responsibility.

Additional suggestions that have come to our attention since the prior post are to:

  • Consider whether an adjustment to the work week would alleviate the need for overtime.  For instance, if a case worker often works a standard week and then is on call over the weekend, changing the work week to start on Saturday could resolve this issue.  Weekday hours could be shortened to compensate for the hours worked over the weekend.

  • Begin to plan ahead for the change in the minimum salary level that is scheduled to automatically increase every three years.  Adjustments to salary and overtime expense should be built into long range financial plans.

Finding the most cost efficient way to comply with this law requires analysis of both your current staffing expenses and your HR practices.  Outfitters4 has staff members experienced in both financial analysis and HR policies and procedures.  Contact us to discuss how we can help you in your preparation for these upcoming changes.