Download Employees Newly Eligible for Overtime

Employees Newly Eligible
for Overtime
By Bob Goldberg | RSPA General Counsel
Overtime compensation has long been an issue
for Resellers. Questions regarding technician
hours, travel time, training, “comp” time, and
company functions have often arisen. Recent
changes to the overtime rules require that every
Reseller review job descriptions, compensation
levels, and time keeping procedures.
Eligibility for overtime compensation is
determined by job duties and compensation.
The fact an employee is paid a salary is not a
factor. It is essential that employees be required
to keep accurate records of their time, on a
daily basis, according to company requirements.
On December 1, 2016, the Department of
Labor, pursuant to the Fair Labor Standards
Act, will increase the minimum amount of
compensation required to eliminate automatic
eligibility for overtime compensation. The current
administration in Washington DC was not able to
raise the minimum wage on a national level and
thus turned its focus to raising compensation by a
rulemaking overhaul of the Fair Labor Standards
Act.
Beginning December 1, 2016, any employee
earning less than $47,476 per year will be eligible
for overtime compensation. On the other end
of the spectrum, individuals earning more than
$134,004 per year will be considered highly
compensated individuals exempt from overtime
compensation. Estimates range that from four to
eight million additional individuals will become
eligible for overtime compensation. The salary
levels themselves are not dispositive of the issue.
No change was made to the “Duties Test” which
considers an individual’s job responsibilities to
determine whether he or she is exempt. The
exemption applies to executive, administrative,
managerial, and professional employees. These
individuals need to have independent decision
making authority, supervise others, and/or have
special education. Remember if an employee is
exempt from overtime they cannot be docked for
working less than forty hours in a week.
The change presents Resellers with several
options. First it is an excellent opportunity to
update your system to track hours, and to
review job descriptions. If an individual is near
the new threshold and meets the “Duties Test”
it may be appropriate to increase their salary.
Recognize that the threshold will increase every
three years so annual salary increases should
be reconsidered
as well. This approach
is beneficial to employees near the
threshold that typically work more than forty hours
per week. Employees currently earning more than
$40,000 should be considered for this option.
Resellers may also designate employees falling
within the new limits as non-exempt and pay
overtime. In this instance review overtime policies
making certain that any overtime must be preapproved, in writing. Adjust your administrative
budget to cover the increased compensation.
Some employers increasing salaries are reducing
benefits to offset increased compensation.
This could include increasing an employee’s
contribution for healthcare benefits. Resellers can
ensure that workload distribution, time and staffing
levels are managed appropriately for white-collar
workers who earn less than the salary threshold.
Resellers should consider hiring additional full or
part -time employees to keep others from working
in excess of forty hours.
It is also possible to change a salaried worker to
an hourly employee. This adjustment could be
for an hourly rate that coupled with anticipated
overtime would amount to the current salary level.
Although a worker may frown upon a decreased
hourly rate, the total compensation would remain
the same. Guarantee a set amount of overtime.
The employee will not be working more hours or
earning less.
In recent days, certain Congress people have
indicated they may introduce legislation to
reverse the Department of Labor’s revised
thresholds. There have also been indications that
the December 1 date may be extended. RSPA
will continue to monitor the status and keep you
advised.
Join Bob on Wednesday, November 2 at 2PM for
a webinar on overtime compensation. Register at
www.GoRSPA.org/Education