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In May of this year, the Department of Labor released new overtime regulations that will require paying overtime for many employees who weren’t previously eligible to receive overtime, or require an increase to an employee’s salary to preserve their exemption from overtime.

One of the main ways the new rule impacts employers is the salary level.  Previously, an employee could be paid $455/week ($23,660/year) or more in order to be excused from getting overtime pay.  The new regulations require that employees be paid at least $913/week ($47,476/year) or more to be considered exempt from getting overtime.

To make sure your organization is in compliance with this new regulation, make sure you do these 3 things:

Audit Salaries and Job Duties

First – take an inventory to see what each employee is earning and find any employees who are classified as “exempt,” or who aren’t receiving overtime pay, and who are earning under $47,476/year.  This is the start of your list of employees who are affected.

But – it’s important not to stop at just reviewing salaries.  These new regulations give HR the perfect time to review job duties or descriptions to make sure that any employee who does not currently receive overtime pay meets the job duties requirements to be exempt, as well as the salary requirement.  If you’re a member of SHRM, there are some helpful, easy to understand questionnaires that can help guide you through determining if a position meets the duties tests.  If you find that an employee does not meet the exemption duties requirements, add them to the list of employees affected.

Communication is Key

Once you determine what will happen to the employees who are affected (raising their wage, changing them to “non-exempt”/ eligible to receive overtime, or some other action), it’s important to communicate with those employees what and why this is happening.  It’s a good idea to provide this in a written format that can be included in an employee file, if necessary, as well as to discuss this in person to allow the employees an opportunity to talk about the changes and ask questions.

Timing is Everything

The deadline to have any changes completed is by December 1st, 2016.  That means that on that date, a Thursday, employees need to be classified correctly.  The time to start figuring out any changes to classifications, or salaries is now.  Especially if you’re planning to thoroughly review job duties as well, employee classifications can be difficult and time-consuming decisions.

Purple Ink is here to help if you have any questions about how to audit salaries and job duties for compliance, what actions to take for affected employees, and how to communicate any changes to employees.  Or – we’re happy to take the entire process off your hands to make your life easier!  Best of luck and happy complying!

Catherine Schmidt
Catherine Schmidt
Catherine Schmidt, PHR, SHRM-CP, is Purple Ink’s Consulting Manager and has nearly a decade of experience managing various HR functions including recruiting, creating training programs, compliance, and performance development initiatives. She has worked in a variety of industries such as professional services, manufacturing, and non-profit settings. You can follow Catherine on Twitter @CatherineS_HR.

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