The new overtime rule has resulted in many employers switching their employees from salary to hourly paid. While some employers believe that employees who perform certain duties are exempt, this is not necessarily the case. An employee is only exempt if they meet the guidelines which have been established by the FLSA.
Who Is Eligible For Overtime Exemption?
In order to be eligible for overtime exemption an employee must meet the following criteria. They must make a minimum of $455 each week (which will change to $913 by December 1st of 2016), they must be paid by salary as opposed the amount of hours they work and they must perform job duties which are exempt.
You Must Choose A New Hourly Rate
When an employee transitions from salaried to hourly pay employers will need to establish a new rate. In most cases this new rate can be reduced to match the previous amount they were paid weekly, so long as they do not fall beneath the state or federal minimum wage.
Employers must exercise caution when reducing wages as compensation for overtime as employees may feel like they’re receiving a demotion. To determine the new rates you’ll have to figure out the average number of hours an employee works on a weekly basis, determine the hours they work overtime, then divide the overtime in half, add that amount to the straight and overtime hours, and then divide the weekly pay by this number and you’ll have the hourly rate.
You May Need To Change Their Job Description
In some cases it may be necessary to change an employee’s job description. Many of the employees who are exempt will be managers that routinely perform shifts which are longer than 8 hours per day. The new job description could state that the employee is required to perform fifty to sixty hours per week for this position, or that the employee is required to see each job to completion irrespective of the amount of hours they put in weekly. In cases where employers don’t wish to pay overtime this would not be needed and the job description can be altered accordingly.
Educate Employees On Hourly Wage Laws
Many employees have received salaried pay for years, and won’t be familiar with the nuances between hourly and salaried pay. It is for this reason that educating them is so important. Remaining in compliance with FLSA is the best way for businesses to avoid having to deal with overtime lawsuits. Time tracking is essential for hourly workers, and they must be made aware of the company’s policy regarding overtime.
Monitor And Track Time
Employees must be required to begin tracking their time before December 1st. This will require employers to teach the new system and delegate managers to administer the account. Employees will also need to acclimate themselves to the new process. This could take days for small businesses but weeks or months for companies which are medium or large. The earlier you begin the process, the better.