Labor Department offers tips for managing overtime rule

overtime-payrollThe overtime rule changes that President Obama called for in 2014 have reached finalization and are estimated to make an additional 4.2 million workers eligible for time-and-a-half wages for working more than 40 hours.

Under the final rule, the salary limit for overtime eligibility will be raised from $23,660 to $47,476 and that threshold will be increased every 3 years based on wage growth.

Many businesses have protested the new rule and the National Association of Landscape Professionals (NALP) was one of the 340 organizations that signed a letter requesting Congress to create a bill that would halt the rule from being finalized.

One of the greatest concerns about the rule is how small businesses will handle the added cost. Most companies plan to adjust to the new regulations by switching the majority of their salaried employees over to hourly employees, but the Department of Labor has listed several other options that are available.

The DOL’s first choice for the employer is, of course, to pay the time-and-a-half wages when an employee works more than 40 hours in a week.

If having employees work overtime is fairly rare, the DOL suggests companies plan and budget for the occasional spikes when overtime events occur. The new act also does not require overtime pay for Saturdays, Sundays, or holidays.

Another option is to raise employees’ salary above the threshold so they are exempt from receiving overtime pay.

“This option works for employees who have salaries close to the new salary level and regularly work overtime,” said Dr. David Weil, administrator of the Wage and Hour Division.

The third suggestion is for employers to take a close look at the workloads of their employees to make sure it is reasonable to expect that volume of work to be completed in 40 hours. If necessary, employers can hire additional workers to better distribute the amount of work.

For those who still choose to shift to an hourly workplace, the DOL points out that there is no requirement to have workers “punch in” and “punch out.” Employers have the freedom to develop whatever system they prefer to record the number of hours worked per day.

One alternative that the DOL does not list, but some experts expect certain companies will do, is to cut employees’ base pay to cover the overtime their workers will accrue.

“The Obama rule puts a huge cost and regulatory burden on employers, who will face pressure to cut back on benefits and full-time employees,” Trey Kovacs, a policy analyst with the Competitive Enterprise Institute, told USA Today.

The final rule will go into effect Dec. 1, 2016.

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