Coming soon: New overtime rule

Will you raise salaries, pay more overtime or reduce hours?
Friday, June 10, 2016

Editor’s note: The new overtime rule is also the subject of our current HME Newspoll. Add your two cents here.

YARMOUTH, Maine – A new overtime rule, slated to take effect Dec. 1, has employers across the country taking a hard look at employee job descriptions and pay rates, says consultant Richard Davis.

“The good news is, you have plenty of time,” says Davis, president of HirePower HR. “But you can’t wait.”

The new rule requires employers to pay overtime (time and a half) for more than 40 hours of work per week for all employees earning up to $913 per week or $47,476 per year. That’s a big jump from the previous threshold of $455 per week or $23,660 per year.

“If someone makes less than that, they can never be exempt,” said Davis. “The employer will have to follow the wage and labor laws and pay overtime.”

Davis offered a few initial steps that employers should take to ensure they are compliant when Dec. 1 rolls around.

Review job classifications

The first thing an employer should do is review the job descriptions of each employee to make sure that they are classified correctly as either exempt or nonexempt, says Davis.

“Delivery drivers, customer service reps, patient care coordinators and respiratory therapists are examples of HME employees that would more than likely be considered nonexempt,” he said. “I can tell you from experience that there are companies out there that are paying people as if they were exempt, and that would not pass the test with the Department of Labor. Do not try to play the game; just do it candidly and honestly.”

Assess pay

Review your list of exempt employees and determine whether they meet the minimum pay threshold, says Davis. If they don’t, the employer needs to decide whether to raise pay or evaluate how many hours of overtime the employee works to see if it would be less expensive to reclassify them and pay the overtime.

On the flip side, employers may make the decision to cut hours, Davis says.

“If I have people that are going to go from exempt to nonexempt, I would evaluate their position to determine whether it remains full time or whether it makes sense to make it a part-time position so there’s not going to be any overtime issue down the road,” he said. “That’s the hard part—it may seem punitive to some employees.”