10 steps to take now in advance of the DOL’s overtime rule
November 2, 2016 12:00 PM
Preparing for overtime rules
These steps, from Mercer’s Cathy Shepard and Leslie Csonka, will help employers prepare for the DOL’s final overtime regulations scheduled to take effect Dec. 1.
Identify …
… exempt jobs with incumbents below the salary threshold of $913/week ($47,476).
Identify …
… overtime patterns of those jobs to get a sense of how much overtime employees are working (if any) and opportunities to reduce overtime worked. This may involve informal tracking by managers or supervisors.
Confirm …
… that jobs you plan to keep exempt meet the duties tests. The duties tests are not changing under the new regulations. Pay special attention to those jobs where a portion of incumbents fall below the new salary threshold and jobs that are at higher risk of misclassification (i.e. first-line supervisors, entry level professionals, admin assistants, buyers, paralegals, inside sales, etc.).
Identify …
…your options for addressing the new requirements and model the most feasible approaches based on your cost considerations and business objectives.
Options include:
· Increasing salary to meet standard salary level threshold
· Converting to non-exempt and paying overtime
· Lowering base wages to take overtime into consideration
· Reducing hours to 40/week (8/day in some states)
· Slowing the hiring of full-time workers
· Hiring additional workers, especially part-time
· Considering non-discretionary and commission payouts that may now be counted toward the salary threshold with some limitations
· Reviewing incentive eligibility, targets and funding mechanisms to address new regulations, help offset cost increases and remain competitive
Options include:
· Increasing salary to meet standard salary level threshold
· Converting to non-exempt and paying overtime
· Lowering base wages to take overtime into consideration
· Reducing hours to 40/week (8/day in some states)
· Slowing the hiring of full-time workers
· Hiring additional workers, especially part-time
· Considering non-discretionary and commission payouts that may now be counted toward the salary threshold with some limitations
· Reviewing incentive eligibility, targets and funding mechanisms to address new regulations, help offset cost increases and remain competitive
Ensure …
…salary range minimums are above the new threshold for exempt jobs, and check range spreads to ensure proper alignment with market.
Consider compression …
…with employees/jobs currently paid above the threshold, especially those managing employees receiving salary increases to the new threshold.
Review …
… jobs with both employees changing to non-exempt and others remaining exempt based on the new salary threshold and duties tests to determine changes needed to the job structure and titling to clearly delineate differences in the roles.
Review …
… job descriptions for exempt roles in particular to ensure duties are accurately outlined and exemption is supported.
Consider …
…impact on morale and perceived status for those moving from exempt to non-exempt. Employees may perceive the change as taking away from the professional status they’ve earned over time as well as reducing schedule flexibility.
Plan …
…a communication approach to the impacted populations. Review career path communications, policies and messaging to mitigate employees’ reactions.
