As the July date for the Department of Labor (DOL)’s overtime rule changes draws near, many employers are trying to determine how to implement the new rules without creating fiscal chaos or employee unrest.

As a first step, employers should determine which employees will be impacted by the change, or who falls under the proposed higher overtime eligibility ceiling. First, start by looking at salaries.

“It’s only exempt employees currently making between $23,660 and $50,440 annually who will be impacted. This will have no effect on hourly people who are non-exempt,” explained Gary Klotz, a shareholder at Butzel Long PC and an employment attorney in the firm’s Detroit office.

A few options employers have for addressing salary and status changes include:

• look for ways to reduce overtime
• hire more employees to avoid overtime
• increase salaries of non-exempt employees to the new exempt level
• change the status of currently exempt employees to make them non-exempt hourly employees who are eligible to receive overtime pay for any time over 40 hours per week

BEWARE OF FALLOUT

While your focus may be on employees affected by the change, it’s important to also bear in mind how changes you implement might be perceived by other employees. This is especially important if you go the pay bump route.

Klotz advises that, “If you only have a few employees in line to receive a bump, it would be wise to handle it as part of their regular annual review process.” This will reduce the chance of others feeling like they’re missing out.

In addition, if you opt to shift salaried employees to an hourly wage, it’s important to note that any flexibility previously offered (i.e., the ability to leave early for personal matters or even work from home) may go out the window. It’s likely a bit of employee job satisfaction may also go with it.

Learn more about this issue by reading the Trends article in the June/July issue of inPAINT magazine: inPAINTmag.com