There is a huge change to OT eligibility coming at the beginning of 2016 and I wonder how/if anyone is planning for this. While this could be similar to the 1099 reporting requirements that "were going into effect" for several years running until the government gave up and dropped them altogether - we have to be prepared for this huge change where staff earning up to $54K (or close to this amount) will now be earning OT. How are you planning to : 1) Deal with FTE's who do not currently use a time card system, but could now be OT eligible? 2) Review/Revamp your job descriptions and/or organizational charts? 3) Address this in your budgets? 4) and How is this impacting your business growth plan?
Looming Change in OT eligibility for FTE's.
Answers
It is hard to believe that this has not exploded on social media and on forums. I need an organized and informative way to inform all my clients before the new year. It will generate a lot of payroll consulting and payroll system (re) setup work.
My Director of
To be exempt currently, workers must make more than $455/week ($23,660 annually). The proposed rule sets the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers which for 2013 was $921 per week, or $47,892 annually. If the 40th percentile approach is adopted, the 2016 level is projected to be $970 a week, or $50,440 annually. This will impact all sectors but it will disproportionately affect the non-profit and service sector industries as well as certain geographic areas of the country.
This will change a LOT for us for our admin staff as well as other leaders. It really makes things difficult for companies that pay commission (like we do), because our leaders earn a lower base pay but higher commissions. This will likely change that model. If I had to guess we would cut out commissions, and offer a bonus structure for hitting sales goals.
You would have to enforce a time clock system and we would definitely implement a very structured OT policy. It will really be interesting to see how this impacts small business owners.
Here's more related content: http://www.hrmorning.com/dol-drops-big-news-new-overtime-rules/.
We are already dealing with 1). We have numerous positions that are salaried, non-exempt. They are OT eligible. But, they don't punch a time clock. They do fill out a time sheet for payroll submission that has to be signed off by their supervisor.
I've used this approach in the past, and never had any legal/HR issues over it.
Having said that, because of what I've observed as abuse of our "honor" system, not in OT which is extremely rare, but in tardiness, long lunches and fighting over who goes to lunch when, I've threatened to put a time clock in the front office and make all non-exempts punch in and out at the front door.
As harsh and parental as that may seem, many in upper
Filed Under:
Human Capital