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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