Overtime exemptions have been delayed, but HR should be ready.
Employers have been on pins and needles waiting for the U.S. Department of Labor’s (DOL) revisions to the rule addressing worker overtime. But they will have to wait a bit longer, as the revised rule was blocked by court order; and the DOL now says it will release a new overtime plan in March 2019. The proposed rule was originally scheduled for release in January.
Under the Fair Labor Standards Act (FLSA), employees who work more than 40 hours per week must be paid a minimum of 1.5 times their pay rate for the overtime hours, unless they are considered exempt. The FLSA exemptions require a minimum salary limit applied to administrative- and executive-level employees, called the “white-collar exemptions.”
The proposed revisions to the overtime rule would have created a tremendous hardship for employers, according to attorney Tammy McCutcheon. She suggested:
· 6.4% of employers would have to cut positions.
· 21% would have to limit alternative working arrangements.
· 12.4% would have to reduce annual bonuses.
Other HR experts have suggested that the proposed rule would have led to budget cuts, layoffs, reduced services, and employee dissatisfaction. Still others defended the proposal, saying that the rule was well-reasoned.
Despite the respite on the final revisions, HR teams should begin preparing, for instance, by identifying employees who are salaried but paid less than $40,000, as these individuals will most likely be impacted.
For healthcare providers who bill through Medicare or Medicaid, it also is a wise idea to meet with an IT team member and/or a compliance officer to review any changes to the Centers for Medicare & Medicaid Services Payroll-Based Journal reporting system that may be required should the exemption rules change.
Finally, HR teams should with executives to discuss possible strategies to amend the employee pay mix to improve the meet organization’s position under the revised rule. For example, combining two or three lower-paying hourly positions into one salaried position above the threshold within the white-collar exemption rule might eliminate some of the overtime the organization is currently required to pay.