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A Three-part Series on Overtime Regulations and Compliance

October 06, 2016 | Leave a Comment

Have you taken all the precautions necessary to prepare for the Department of Labor’s regulation changes?

On Dec. 1, 2016, the federal annual salary threshold for employees exempt from overtime pay will double, increasing to $47,476 from $23,660. In a three-part online series online with the Society for Human Resource Management, our Director of HR Bethany Holliday, PHR, SHRM-CP, describes the resources businesses in St. Louis and nationwide can expect to spend on compliance.

DOL Compliance

Part 1: The Nuts and Bolts of Complying with the New Overtime Regulations

The DOL estimates that it should take businesses about one hour to review data and ensure that their companies are compliant with the new rules. But some employers are taking issue with that estimate.

Bethany argues in this SHRM article that with the time spent on compliance and figuring out how to control overtime costs, the DOL’s one-hour estimate is pretty conservative.

Part 2: Overtime Rules Create Reclassification Conundrum

Middle managers who were properly classified as exempt are largely affected, as many of them fall below the new $47,476 threshold. At Cornerstone, the majority of our groups are focusing on their mid-level management for salary increases.

Bethany says many of these groups rely on these employees to work more than 40 hours and, in most cases, their salary is near enough the new threshold that it makes more financial sense to increase the annual salary and keep the employee as exempt.

But salary is not the only category to consider when determining to keep a worker exempt from overtime. Even if employees meet the revised salary test, they must also meet the “duties test” to be exempt. With the duties test, the Fair Labor Standards Act provides an exemption from minimum wage and overtime pay for employees with executive, administrative and professional roles.

Part 3: Reclassified Workers Have Mixed Reactions to New FLSA Overtime Regulations

The path to compliance is bumpy for employees as well. Some employees may view a change to nonexempt status as a demotion. Others may feel limited if told to cap their hours worked each week.

Managers should let employees know that the company is complying with new regulations and as such, wants to make sure the employee is properly compensated for their time worked.

If you have questions about the DOL’s revised overtime regulations, please contact Bethany Holliday, PHR, SHRM-CP, at bethanyh@cornerstoneinsurancegroup.com

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