The Department of Labor announced a proposed rule that would extend overtime protection to nearly 5 million white collar workers within the first year of its implementation. Exception to overtime eligibility was meant to be restricted to highly-compensated executives and professionals, but has been applied to others who ought to be compensated for their increased hours. Implementation of such a rule will no doubt have an impact on individuals and the businesses that employ them. If this proposal goes into effect, some changes in the way employees are categorized will be necessary. It would be beneficial for businesses to know up front who in their employ would be exempt or nonexempt and to have in place a plan for dealing with those who will become nonexempt and will deserve additional compensation for overtime worked.
In “Contingency Planning Urged for Proposed Overtime Rule,” an article written by Allen Smith and posted on the Society for Human Resource Management (SHRM.org) website, he makes the point that even though the rules of the proposal have not been set, it would be wise to begin brainstorming about potential business changes now, so that you will be prepared to comply when the Overtime Rule proposal becomes law. . Begin with a discovery of which employees fall within the salary range of $23,000 to $50,000 and whether they meet the criteria for exempt or nonexempt positions. Alex Passantino, an attorney with Seyfarth Shaw and former acting administrator of the Wage and Hour Division, offers some questions for consideration:
- Do employee positions meet the current duties test?
- Should you raise employee pay to achieve the new salary level or pay the employee overtime?
- Should employees above and below the proposed salary levels stay at the same classification?
The answers to these questions will give you insight as to where your company stands in the event that the proposal is enacted and an idea of the impact that the proposed rule will have on your business. That way, you will avoid being unpleasantly surprised with possible financial changes if and when they come about.
If you are using Microsoft Dynamics® GP Payroll, you’ll be interested to know that Integrity Data has developed the Overtime Hours Rules add-on solution designed to streamline the calculation of overtime hours. Overtime Hours Rules saves you time by automatically calculating overtime hours during the payroll process, without any additional processing steps after you have set up your parameters for each employee within the solution. You can create your own overtime rules to accommodate specific requirements for the employee, position, department, or rules unique to certain states. In addition, this solution will support compliance with Microsoft Dynamics® GP overtime rate calculations for the Fair Labor and Standards Act’s proposed overtime rules as well as other state requirements.
So, plan ahead. Be ready for any changes in the overtime rules by having a good idea of how they will impact the finances of your business and what necessary changes you may have to consider.
To learn more about Overtime Hours Rules add-on as well as our other powerful payroll solutions, contact Integrity Data.