New federal overtime pay rules running late
By Jim Kendall
This column originally appeared in the December 21, 2015 Daily Herald
Karla Dobbeck thinks Uncle Sam has given business owners a gift: Changes to overtime pay rules that initially were expected to take effect next month now aren’t likely to kick in “until at least July,” she says.
Dobbeck is president, Human Resource Technologies Inc., an Algonquin HR consulting firm.
Others who advise businesses on employment matters think it could be next year at this time, if then, before job classifications and overtime pay rules change. Some “just don’t know.”
“But don’t sit back and wait” for new rules from the U.S. Department of Labor, Dobbeck says. “Use this time to look at your job descriptions, duties and pay. You hire based on job descriptions. Performances are based on job descriptions.
”Job descriptions are the heart of your company.”
So are pay classifications, which is where the proposed new rules could get dicey.
The Obama Administration’s overtime pay changes apparently will increase the annual salary threshold for employees classified as managers, and therefore exempt from being paid overtime, to $50,440. The current threshold is $23,660.
In other words, a “manager” you’re paying $25,000 today can be required to work overtime as necessary without overtime pay. Tomorrow you could be required to pay overtime to that same employee with the same duties – or boost the salary to at least $50,440 to avoid overtime pay for overtime work.
“Wage and hour rules are very complicated,” says Jennifer Adams Murphy, shareholder and senior attorney at law firm Wessell Sherman’s St. Charles office. “Some employers must change the way they record hours – lunch breaks and rest periods, for example.
“There’s a lot of grief and anxiety among employers.”
Unfortunately, there is no easy checklist for employers to follow as they weigh how to handle the likely changes.
Determinations truly are case-by-case, says Stephanie Dinkel, an attorney at Koehler & Passarelli LLC, Woodridge. “This (extra time) is your window to start working on job classifications, duties and salaries,” Dinkel says. “Who truly is exempt?”
In addition to requiring business owners to rethink their compensation strategies, the changes are expected to raise some perhaps touchy internal issues – when, for example, a currently exempt worker whose pay is near the bottom on the exempt scale is reclassified out of what often is perceived to be a management position into a non-exempt classification that is no longer considered management but, because overtime pay is allowed, may turn out to be a better financial package.
“It does come up,” says Murphy. Such a situation “can be perceived as a step back, even though the employee has the same title and duties – but now qualifies for overtime pay.”
Her advice to employers: Explain there’s nothing personal in the change, but you have had to make job-related changes to comply with new federal rules.
“It shouldn’t be seen as a demotion,” Dinkel suggests. “It can be a way for the employee to get more pay.”