Preparing for FLSA Compliance
Jump Start with Warren Whitney
Contact Beth Williams, Head of Human Resources, for more information:
What will it mean to your continued success if you engage the Warren Whitney HR Professionals to help with the new overtime rules, evaluating the impact these rules might have on your budget and operations, and recommending plans and best practices to meet new compliance measures? It’s final: the published compliance deadline is December 1, 2016!
Your Warren Whitney HR Professionals Are Fully Prepared To:
Provide an Accurate, Timely Evaluation About the New Regulations
This is invaluable because many nonprofits and small businesses are just learning about the new overtime rules! Many are not prepared at all.
Collect and Analyze Salary and Pay Information, Including Bonuses
Do you know how many hours exempt employees work each week? Being able to answer that, among other questions, could prove to be critical need-to-know data if a position that is classified as exempt today needs to be reclassified as a non-exempt position due to the overtime rules.
Collect and Analyze Information Regarding Job Duties, Work Hours, and Staffing Needs
Among other factors, having accurate job descriptions that reflect the job being performed, the skills necessary to perform the job, and identifying whether or not the job duties still fall within the administrative, executive, professional, computer, or outside sales exemptions will be a key component for compliance.
Consider Potential Changes to Meet the FLSA Amendments
There are a number of decisions to be considered that have bottom-line impact! Just a few of the many considerations are:
If an employers chooses to comply with the final salary regulations by increasing salaries at the bottom of the pay scale (to meet the $47,476 baseline), will the employer also be faced with potentially increasing the salaries of those who are paid above the new minimum for the purpose of perceived fairness, retention, and morale?
If the employer uses 40 hours per week to calculate each new employee’s hourly rate of pay, and each employee continues to work the same amount of overtime as they do now, how much more will the employer pay in wages per year?
These are just a few of the many questions that will need to be addressed to manage the new overtime rules.
Develop Recommendations for Compliance
With the data and analyses referenced above, your Warren Whitney HR Professional can begin the process of working to develop models showing the potential costs and effects of the different ways to respond to the regulations. It is likely employers will want to explore some alternatives before they find the best possible solution for their organization. For example, for non-exempt pay rates, should the employer simply divide the current weekly salary by a 40 hour week? Or, what is the effect if the employer drops the hourly rates of newly non-exempt employees, so the total cost when paying overtime will be comparable to the salary they were paid when they were exempt? Should they consider reducing fringe benefits such as health insurance contributions, 401(k) matching, vacation, sick days, etc. to offset the increased overtime costs? Does it make sense to increase the salaries of a group of employees to place them in the exempt category in order to avoid paying overtime?
Having the ability to model these and other possible scenarios will be the key to implementing such changes efficiently and accurately.
Prepare Management for the Changes
Which timekeeping practices and systems might need to be changed if managers are reclassified as hourly, non-exempt employees? What will the promotion track for managers look like after overtime rules changes are implemented? What morale, retention, and turnover issues might surface, and what can be done to proactively manage such matters?
Communications with Employees About the Changes
If an overhaul of the overtime rules seems confusing to business owners and management, it is almost guaranteed that employees will have many questions about this change. Your Warren Whitney HR Professional will help management to craft a message for employees that fully supports the changes being made to comply with the new overtime rules and provide other employee counseling services on this topic, as needed.
Reclassifying an employee from exempt to non-exempt offers overtime options, but it may also appear to be a loss of status and freedom. What can be said or done to reassure a reclassified employee who may feel anxious about what they perceive as a demotion? How will the employer handle employees who are unhappy because management needs to rearrange their work schedules to avoid incurring higher overtime costs?
The overtime changes will not only affect businesses and non-profits; it will also impact employees. The goal is to minimize adverse perceptions and anxieties with employees and start communicating with employees.
Provide Additional Support and Guidance As Needed
Remember, this is not a one-time problem. The new rules provide automatic updates to the exempt salary threshold every three years beginning January 1, 2020. There are multiple other ways this change will impact an organization.