Are you equipped to handle the new DOL overtime regulations? Be sure you are prepared by using our readiness checklist.
The U.S. Department of Labor released its final rule modernizing overtime regulations on May 18, 2016. In effect as of December 1, 2016, the new regulation is anticipated to extend overtime pay coverage to over 4 million Americans who were not presently qualified under federal law.
Ensure that your business is prepared to obey the new regulations by following this comprehensive readiness checklist:
Compliance Planning Checklist: The DOL’s Final Overtime Pay Rule
♦ Review: Do your employees qualify as being covered by the Fair Labor Standards Act (FLSA)? Attempt to define if your employees fall under FLSA coverage. If you have questions or if you think the FLSA does not apply to your employees, consult with a wage and hour labor attorney for clarifications.
♦ Readiness: If your employees are covered by the FLSA, how do you propose to comply with the DOL overtime rule increasing the salary threshold for exempt employees? Employers of workers who qualify have multiple options to comply with the rule after it goes into effect on December 1st, 2016, including increasing employee salaries to at least $47,476/year, converting employees under the $47,476 annual salary threshold from exempt (salaried) to nonexempt (hourly), and limiting overtime hours of nonexempt employees. Below is a list of possible compliance plans and considerations to help you plan for implementation.
Compliance Plans and Considerations
♦ Raise: Should you increase any of your workers’ present salaries? You could raise the salaries of any currently exempt employees to at least the $47,476 annual threshold, to keep them exempt from the new overtime requirements.
♦ Reclassify: Should you reclassify any employees? Staying in compliance with the final Department of Labor rules will likely require some employers to reclassify some currently exempt employees to nonexempt status. Using this strategy, you would convert exempt employees (full and part-time) making less than $47,476/year to nonexempt employees, and then would have to pay overtime for hours worked over 40 hours for the work week.
♦ Rebase: Should you adjust hourly rates to account for the possibility of overtime compensation? When deciding the hourly pay rate for newly reclassified nonexempt employees, employers could try to maintain current salary levels by dropping the hourly rate to account for the possibility of overtime pay.
♦ Reduce: Should you decide to limit overtime hours allowed for nonexempt employees? If employers are required to reclassify certain exempt employees as nonexempt, they could implement a strategy to limit overtime hours in order to control costs.
No Matter Which of the Compliance Strategies You Pursue, You Still Should…
♦ Retrain: You should train your employees and supervisors, so that they are aware of and prepared for the final overtime regulations. Reclassified nonexempt employees may be confused once they are reclassified and still act as if they’re exempt and work more than 40 hours a week because that’s what they are used to doing. It is imperative that a communication plan is put in place to curb employee overtime as well as explain why employees have been reclassified.
♦ Recordkeeping: Make sure that you have an appropriate time and attendance system in place to track nonexempt employees’ hours in order to stay in compliance with the FLSA’s detailed recordkeeping requirements. Keeping track of employee’s hours will now be more important than ever.
♦ Restructure: Make sure that your benefits are structured to cover the employees you want to cover.
Sign Up for EPAY’s DOL Overtime Compliance Solution
EPAY Systems can help prepare you for the December 1st start date. EPAY’s DOL Overtime Compliance Solution-In-a-Box includes:
- Unified payroll and time & attendance technology to track employee hours and view compensation.
- A set of comprehensive reports to understand how employees’ hours are trending as well as job tasks.
- Real-time alerts to flag employees approaching overtime.
- Live 24/7 customer support to help you interpret the new rules and advise on employee communication if HR changes need to be made.
- Quick start implementation to ensure your DOL time tracking and analysis can begin within 30 days.
Sign up for EPAY’s DOL overtime compliance solution by July 30th to receive an account credit of up to a $2,000*.