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Time is Ticking – Are You Ready for the New Overtime Changes?

Time is Ticking – Are You Ready for the New Overtime Changes?

In December, sweeping changes to the Fair Labor Standards Act will take effect, changing overtime rules for salaried employees for the first time in over a decade. Given the significant impact the new rule could have on employee satisfaction, developing an effective communication plan is key.  Employees may have already heard news about the overtime changes, so it is important to get ahead of any rumors and reduce employee anxiety and stress by presenting the facts and informing them about upcoming changes.

Currently, the minimum salary level to qualify as non-exempt and eligible for overtime compensation is set at $455 per week (or $23,660 annually). On December 1st, this threshold will more than double to $913 per week ($47,476 annually).

What This Means for Employees

The Department of Labor (DOL) reports these new rules will extend overtime protections to more than 4 million salaried employees in the U.S. Simply put, if an employee makes less than $47,476, they are entitled to extra compensation if they work more than 40 hours per week – no matter their job title or description.  In addition, they will need to start tracking their time, including time spent on after hour emails or texting.

What This Means for Employers

Employers will have to make changes to the ways they compensate their employees. Companies will need to either increase salaries at these positions so they reach or exceed the minimum threshold to make them exempt, or accept the loss of the exemption and be prepared to increase overtime payments. 

How to Prepare for FLSA Changes

Compliance with the FLSA changes requires fast action on the part of employers. Multiple departments and aspects of your business will be affected by this change, so starting early will only help in the transition.  Employers should take steps now to prepare for the changes.

  1. Inform your senior leadership teams in finance, HR, IT, communications, and legal departments. From their insights, you should be able to build a more complete business plan that adequately addresses how your company will – and won’t – change as a result of the new regulations and when those changes will be implemented in your organization. This will help you identify potentially impacted jobs and prepare to outline next steps in making the necessary transitions.
  1. Analyze business impact of the proposed changes. This should include understanding how employees could perceive a potential change, the number of people affected by the new overtime rules, and the financial and HR impacts of converting employees from salary to hourly. The full cost of compliance should be taken into account while further detailing how such changes will be funded both initially and in the future.
  1. Ensure that there are systems in place to accurately track hours worked and properly calculate overtime. This includes accounting for time worked after hours since this is compensable time for non-exempt employees.

It’s crucial that each level of your organization is prepared for the coming FLSA changes and begin the preparation process sooner rather than later.

For more information about FLSA regulations and the coming changes, contact Nancy Ellington at Compass Total Rewards and find out how your business can prepare and plan for these and future changes to stay compliant, functional, and successful.

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