by Dave Katzenmeyer, President, Genesis Background Screening Services
With over 4 million workers affected by the new overtime rules, there is bound to be a big impact on companies, especially small businesses. Whether you have hourly, exempt employees or both, your company will likely have some major changes in payroll.*
It has become common for businesses to classify their workers based on what works for them instead of following the law’s definition of what constitutes hourly employees and what is considered exempt. With the new law requiring compliance by December 1st, 2016, this has opened a can of worms for some employers.
For example, if you have an employee that fits the definition of exempt, but makes less than $47,476.00 annually, you will be required to give them a raise to comply or pay overtime. Now your employee who has felt like management is put in a position to fill out timesheets. They might be happy to get overtime if they regularly work more than 40 hours, but they may also feel resentful of the many hours they worked extra when they were exempt that they did not get paid for. And the whole process could make them feel like they are getting a demotion.
If you have been misclassifying employees for a while, this may be a little challenging. Regardless of how you got into this mess, now is the time to clarify the definition of your employees’ positions. And communicating with your employees could go a long way in minimizing angst among the staff. Helping them understand that you aren’t making changes on a whim, that you are following the law, will calm jitters.
Some of the concerns your employees may have:
- How will the new rule affect me?
- How do I track my time?
- Will I be working more for less pay?
- How will this affect my schedule?
- Will my job duties change?
- How come my exempt manager got a big raise and as an hourly worker, I didn’t?
What about your bottom line? If you have exempt employees that are currently making less than $47,476,00 a year, there is no denying that this law is going to impact you. Maybe now is a good time to find a way to minimize overtime and streamline some of your work processes to reduce costs.
And, if you have an employee that you have been classifying as exempt that does not meet the criteria, it’s time to get them on an hourly status. If you know that they will be working a lot of overtime, you may be able to reduce their hourly rate so that the total of their hourly pay plus their overtime can equal approximately what they made when you were calling them a salaried employee. Give it some thought and be sensitive to the employee – you may be changing the way they think about themselves within your company. It’s in your best interest (and the company’s) to keep your staff engaged and comfortable with their role.
Stay on top of your company’s HR processes to be sure you are staying compliant with changing regulations. If you have any questions or would like a consultation on HR processes, best hiring practices or background screening, you can call 866 944-0041 ext 101, email firstname.lastname@example.org or visit www.genesisbackgroundscreening.com
*On December 1st of 2016, exempt employees will have a minimum salary of $913 per week (or $47,476.00 per year). Future automatic updates to these thresholds will occur every three years beginning on January 1st, 2020.