On Dec. 1, new overtime regulations will make most salaried, white-collar employees earning less than $47,476 a year ($913 per week) eligible for time-and-a-half pay for overtime work. For some employers, the rule will have little to no effect. For others, including many small businesses in the Sarasota/Manatee area, the Department of Labor’s new rules portend a culture shift.
Employment attorney Christine Sensenig of the Hultman Sensenig + Joshi law firm sees it as an opportunity for employers.
“A lot of my clients are taking a look at it and saying, ‘We have people working 45 hours a week and we don’t quite know why,’” Sensenig says. “This is giving them that forced opportunity to determine whether those employees really need to be working 45 hours a week or whether they’re being inefficient.”
The DOL predicts that an estimated 4.2 million employees will become newly eligible for overtime protection. This has three main implications for those employees. Either they’ll see a salary bump to $913 a week or more, they’ll receive overtime pay, or they’ll find themselves working fewer hours.
One of the most significant changes for employers, Sensenig notes, is an increased vigilance in recordkeeping. Employers haven’t had to keep appropriate time records until the new rule because anyone making more than $455 per week was exempt. Now, salaried employees who never had to keep track of their time will have to keep accurate records.
“You’re going to have a whole group of [employees] who are going to feel diminished, demeaned,” Sensenig says. “They’re not going to like the fact that they have to sign in, sign out; clock in, clock out. One of the things I’m telling my clients is to start the records keeping process [immediately].”
For an employee currently making, say, $32,000, if that employee is currently working more than 40 hours a week, his or her employer could say that starting Dec. 1 they want that employee to cap their hours at 40. If they go over 40 hours, the employer will have to pay, but the employee could theoretically be reprimanded for violating company policy. In other words, employers should make it clear that any overtime must be preapproved.
“They are staffed up, they’re ready, and they’re going to use that notion of misclassification because they’re concerned that people are going to classify their employees as independent contractors,” Sensenig says. “Their answer is, ‘No, you’re not. We’ve got the staff and we’re going to check you out.’”And if you think you can skirt the new rules by switching your affected employees’ status to independent contractors, Sensenig says beware. The DOL confirmed it has 66 wage and hour investigators assigned in Florida to ensure that companies are complying.
Plus, Sensenig says, “Even if DOL doesn’t have as much of the manpower as they might need, there are a lot of law firms out there that do.”
The Bottom Line from the DOL
In response to the new overtime rule, employers can:
A) Pay time-and-a-half for overtime work.
B) Raise workers’ salaries above the new $47,476 threshold.
C) Limit workers’ hours to 40 per week.
D) Some combination of the above.