How to Prepare for the New Overtime Rule

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As the Department of Labor (DOL) has recently released a New Overtime Rule regarding the Fair Labor Standards Act, employers may be left wondering: how do I communicate these changes to my employees tactfully? This new change will affect several employers and their employeesbusiness that are used to being exempt, or salaried. If their role needs to be reclassified, or their pay altered in any way, you should set up a plan to do this effectively while still respecting their feelings and concerns.

To reiterate the updates from our previous blog post :

  • The Department of Labor set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers ($921 per week, or $47,892 annually)
  • They increased the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually)
  • They established a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption.

Employers are going to have to approach their situations individually and review the employees they currently have as exempt. Then, they will have to face the decision on how to adjust their workforce. They can raise employee’s salaries to the new requirement, or they will have to reclassify the affected employees properly as non-exempt. Consequently, they must pay them overtime whenever they work over 40 hours in a workweek. If the employees are reclassified from exempt to nonexempt, keep in mind that they will have to use a time-clock regularly. If you don’t already have reliable timekeeping software in place, now is the time to narrow it down! Elite Payroll Solutions makes it easy to manage your workforce, and offers effective and affordable timekeeping software: browse your options here as you develop your plan. After all, December 1st is right around the corner! Consider the following ideas:

  • Employees are going to be curious about the changes, and they will definitely start to ask questions. You will be considering your options now, so you should have time to come up with answers to common questions beforehand. Be open with your employees, and reassure them that you are working through your options and will communicate everything with them along the way.
  • Be mindful of the timing, and make sure that all employees know about the change before it happens, especially if there is going to be a reduction in pay or a change in title. It will be easier to accept these decisions if employees are given time before they actually see it occur on their paycheck.
  • As you communicate with employees, do your best to deliver this message in a positive light. After all, it is a step forward to ensure that employees are being paid fairly and consistently. These rules are what allow employees to feel confident about their work and that their rate of pay will reflect this.
  • Anyone who is going to be reclassified should be addressed immediately. While moving from exempt to non-exempt may be seen as a demotion, this is certainly not the case! It has many benefits including improved work/life balance and receiving overtime when necessary. Remind them that this is the law, so it is important to comply in order to ensure success and jobs in the future. If they are still hesitant, just remember that it may take time. As long as you are doing your best to communicate effectively, your employees will stand by you no matter what.

Uncertainty can be scary, yet change often leads to better outcomes in the long-run. That is the goal of this new rule, and employers will be in charge of setting the tone for their office and staff. Moving forward with a plan intact will ensure stability and clarity for your workforce. If you have questions of your own, be sure to visit https://www.dol.gov/featured/overtime to simplify your mindset so that you can tackle the new rule with confidence! Your employees will appreciate this, and you will be setting your entire company up for success in the future.

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