Note: The U.S. Department of Labor’s overtime rule will no longer go into effect on December 1, 2016. A federal judge ruled against it on November 22, 2016. An overtime rule will might still go into effect at a later date. We’ll update this article if more information becomes available.
The U.S. Department of Labor (DOL) recently introduced a new FLSA salary threshold. The DOL estimates that 4.2 million workers will be affected by the FLSA overtime rules.
If you have exempt employees, you might have to make some changes to accommodate the new FLSA overtime rules. You will also need to talk to newly nonexempt employees about the overtime rules.
The new FLSA salary threshold
The FLSA salary threshold is the minimum salary you must pay employees for them to be exempt from overtime wages.
The salary threshold was $23,660. But, in May 2016, the DOL overtime rule set the new FLSA salary threshold at $47,476.
Employees who were previously exempt might now be nonexempt. If you need to reclassify currently exempt employees, you will need to find ways to comply with the DOL’s new salary overtime law.
Once you determine how you will adjust your employees, it is important to have open and clear communication with employees.
Talking to newly nonexempt employees
Here are the basic things you should talk to employees about to encourage a smooth transition.
Clarify that the changes aren’t your fault
When you tell employees about the changes, they might be quick to blame you. Explain the DOL overtime rules and new FLSA salary threshold to your employees. Let your employees know that the changes are not arbitrary; you’re complying with federal laws.
Promote the changes as positive
Many employees view exemption from overtime as an elite or professional status. Employees who are newly nonexempt might view the switch as a negative change, equivalent to a demotion. Let employees know that exempt vs. nonexempt status is not a reflection of their importance. Employee classification is only a pay designation.
Depending on your overtime policy, you can positively promote the changes. Let employees know that they can now earn extra income for any overtime hours they work.
Provide timekeeping training
This might be the first time some of your newly nonexempt employees are required to keep track of the time they work. You should train your employees on how to use your timekeeping method. It is important to make sure employees know how to do this task accurately, and that you follow time clock rules and regulations. If you don’t already have timekeeping systems in place, consider purchasing an online time and attendance solution for your business.
Explain to your employees that they need to track all the time they work. Employees even need to keep track of small amounts of time, such as answering emails at night, or taking a business call during lunch.
Explain flexibility changes
Exempt employees often enjoy more workplace flexibility than nonexempt employees. Tell your newly nonexempt employees how their new status affects their flexibility.
Often, exempt employees can create their work schedule around personal errands and family events. Now, employees must make sure they accurately track the time they actually work or don’t work.
Talk about job changes
Depending on your overtime policy, some jobs might change when the employee becomes nonexempt. You might have to reduce some employees’ tasks to limit the amount of overtime they will work. If you change or redistribute some tasks, make sure you tell the affected employees.
Also, make sure you clearly explain your overtime policy. Let employees know if they can work overtime to finish their work. If you will let employees work overtime, tell employees if there is a procedure for asking to work extra, or if there is a cap on the amount of overtime allowed.
Train your supervisors
Make sure all supervisors understand your overtime policies, even if the new FLSA salary threshold does not impact them. Supervisors can help enforce your policy. Your employees can also go to supervisors with any questions.
Do you need an easy way to keep track of nonexempt employee time? Try Patriot’s time and attendance software. Employees can easily clock-in and clock-out, and the hours are automatically sent to our payroll software. Try both for free!