1. THE OVERTIME RULE: WHAT YOU NEED TO KNOW
September 22, 2016
THE OVERTIME RULE: WHAT YOU NEED TO KNOW
Presented By:
Warren Averett & Starnes Davis Florie

2. Review of FLSA Basic and Changes
Presented by: Trip Umbach, Starnes Davis Florie
Review of FLSA Basic and Changes

3. FAIR LABOR STANDARDS ACT (FLSA)
Review of FLSA Basic and Changes
FAIR LABOR STANDARDS ACT (FLSA)
Minimum Wage
OVERTIME

4. INTENT OF LAW Decrease hours worked Increase pay Create jobs
Review of FLSA Basic and Changes
INTENT OF LAW
Decrease hours worked
Increase pay
Create jobs

5. DOES IT APPLY TO ALL EMPLOYERS?
Review of FLSA Basic and Changes
DOES IT APPLY TO ALL EMPLOYERS?
Almost all
Non-profits are different

6. OVERTIME FUNDAMENTALS
Review of FLSA Basic and Changes
OVERTIME FUNDAMENTALS
OT is hours worked over 40 in a work week
OT must be paid at 1½ times an employee’s regular rate
Private employers cannot give “comp time” instead of paying OT
Employers cannot agree with employees to not pay OT
ALL employees are entitled to OT … unless EXEMPT

7. WHO IS EXEMPT? Generally, three requirements:
Review of FLSA Basic and Changes
WHO IS EXEMPT?
Generally, three requirements:
Salary basis
Salary level
Duties
Employer has burden of proof

8. MOST COMMON EXEMPTIONS
Review of FLSA Basic and Changes
MOST COMMON EXEMPTIONS
Executive
Administrative
Professional
Highly Compensated
Outside Sales

9. WHAT IS THE RISK? (Why should you care?)
Review of FLSA Basic and Changes
WHAT IS THE RISK? (Why should you care?)
Back wages (unpaid overtime) for 2 years (3 years if willful)
Liquidated damages, unless good faith
Attorney fees
Collective/class action lawsuits
Department of Labor
No insurance

10. HOW CAN YOU MANAGE THE RISK?
Review of FLSA Basic and Changes
HOW CAN YOU MANAGE THE RISK?
Review all exempt/non-exempt classifications
Make changes where needed
Consider legal opinion in close cases

11. WHAT WILL CHANGE DEC. 1, 2016? Salary level Nothing else
Review of FLSA Basic and Changes
WHAT WILL CHANGE DEC. 1, 2016?
Salary level
Nothing else

12. NEW SALARY LEVEL Executive, Administrative, Professional
Review of FLSA Basic and Changes
NEW SALARY LEVEL
Executive, Administrative, Professional
$47,476/year or $913/week (up from $23,660/$455)
Increase every 3 years
Up to 10% nondiscretionary bonus, commission, incentive pay
Catch up payment quarterly

13. NEW SALARY LEVEL Highly Compensated Employee
Review of FLSA Basic and Changes
NEW SALARY LEVEL
Highly Compensated Employee
$134,000/year (up from $100,000)
Increase every 3 years
Amounts above $47,476 can be nondiscretionary bonus, commission, incentive pay
Catch up payment annually

14. How to Respond to the Salary Level Changes
Presented by: Kelly Cochran, Director of HR, Warren Averett
Yes, You Do Have Options!
How to Respond to the Salary Level Changes

15. OPTIONS Raise salaries to maintain exemption
How to Respond to the Salary Level Changes
OPTIONS
Raise salaries to maintain exemption
Pay a fixed salary and pay overtime
Convert to an hourly pay rate and pay overtime
Adjust Wages
Reorganize workloads and schedules to avoid overtime

16. CONSIDERATIONS TO MAINTAIN EXEMPTION
How to Respond to the Salary Level Changes
CONSIDERATIONS TO MAINTAIN EXEMPTION
Do exempt employees meet the $47,476 threshold if you include bonuses and commissions?
Can you afford to raise salaries/bonuses to meet the new threshold?
Do they travel, work from home, mobile devices, or work other hard to track schedules?
Do they meet the duties test?

17. MAINTAIN EXEMPTION BY INCLUDING BONUSES & COMMISSIONS
How to Respond to the Salary Level Changes
MAINTAIN EXEMPTION BY INCLUDING BONUSES & COMMISSIONS
Weekly Salary of at least $ ($42, annually)
Salary + bonus/commission must average at least $913 per week ($11,869 quarterly)
If salary + bonus/commission do not equal at least $11,869 for the quarter, you must pay a catch-up bonus

18. CONSIDERATIONS TO CONVERT TO NONEXEMPT
How to Respond to the Salary Level Changes
CONSIDERATIONS TO CONVERT TO NONEXEMPT
Do your exempt employees making less than $47,476 work overtime (over 40 hours per week)?
Do you know or can you estimate how much overtime is worked?
Can you limit overtime?
Will benefits be impacted/reduced by switching to nonexempt?

19. OPTIONS TO CONVERT TO NONEXEMPT PAID SALARIED
How to Respond to the Salary Level Changes
OPTIONS TO CONVERT TO NONEXEMPT PAID SALARIED
Maintain current salary and pay OT for hours over 40
Maintain current salary but define it to include all regularly scheduled defined hours and pay half time for hours over 40 (and full OT for hours over the defined #)
Adjust current salary taking expected OT into consideration
Example: Jane earns $40,000 and is regularly scheduled to work 50 hours per week
Method #1: $769 weekly salary + $288 OT = $1,057 ($54,964)
Method #2: $769 weekly salary + $77 OT= $846 ($43,992)
Would owe full OT for hours over 50
Method #3: $560 weekly salary + $210 OT = $770 ($40,040)
Method #3(b): $700 weekly salary + $70 OT = $770 ($40,040)

20. OPTIONS TO CONVERT TO HOURLY / NONEXEMPT
How to Respond to the Salary Level Changes
OPTIONS TO CONVERT TO HOURLY / NONEXEMPT
Divide weekly salary by 40 hours
Divide weekly salary by average weekly hours
Adjust wages based on expected OT
Example: Jane earns $40,000 and is regularly scheduled to work 50 hours per week
#1: $19.23/hour = $769 +$ 288 OT = $1057 ($54,964)
#2: $15.38/hour = $615 + $230 OT = $845 ($43,940)
#3: $14.00/hour = $560 + $210 OT = $770 ($40,040)

21. ANOTHER OPTION Fluctuating Workweek Example: Paid $770/week
How to Respond to the Salary Level Changes
ANOTHER OPTION
Fluctuating Workweek
Hours must fluctuate from week to week
Pay a fixed salary regardless of hours worked + Half rate for hours over 40
The hourly rate and Half rate changes based on hours worked that week
Hourly rate cannot fall below minimum wage
Must have a clear mutual understanding with employee
Example: Paid $770/week
Week 1: Works 55 hours; Half rate = $7x15 + $770 = $875
Week 2: Works 45 hours; Half rate = $8.56 = $812.80
Week 3: Works 40 hours; Half rate = 0 = $770
Week 4: Works 65 hours; Half rate = $5.92 = $918

22. SUMMARY Calculate and Analyze Options
How to Respond to the Salary Level Changes
SUMMARY
Calculate and Analyze Options
See link: guidance.pdf
Consider Pros and Cons of each option
Take other factors into consideration
One Size Does NOT Fit All!

23. Other Considerations & Opportunities
Presented by: Anna McLaughlin Senior Consultant
Warren Averett Workplace
Other Considerations & Opportunities

24. BEST PRACTICES Communicate with IMPACT Start Early
Other Considerations & Opportunities
BEST PRACTICES
Communicate with IMPACT
Investigate  Medium  Plan  Allies  Content  Test
Start Early
Prepare Talking Points
Educate managers and supervisors
Anticipate employee responses (+ and -)
Document evaluation / next steps

25. Other Considerations & Opportunities
OPPORTUNITES
Housekeeping: job descriptions, pay and bonus programs, policies
Demonstrate that you are on top of wage & hour laws/competitive; desire to comply in good faith
Make it easy to understand

26. Other Considerations & Opportunities
ADMINISTRATIVE
Primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and Discretion & independent judgment in matters of significance
Directly related to (examples): work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, etc.
Major assignments / affect business operations to a substantial degree / authority to commit employer in matters that have significant financial impact / waive or deviate from established policies without approval

27. Other Considerations & Opportunities
THE BUZZ
I'm not sure why my position and others similar to mine are non- exempt vs. exempt.
So it doesn't make sense to me. I also resent "punching in and out" as Executive Assistants, we are on call all the time during off hours. I do get some flexibility for this "off time" but would rather be exempt because it is a pain when you need to leave early for an appointment and it just doesn't reflect the true nature of our jobs.
Due to my executive requiring in office coverage for about hrs. per day, I am way glad that I'm hourly because I get close to 5 hrs. per week of OT pay which works out to be about $10-12K per year. If it were an option though, I would rather get the extra $$ in my base salary and be exempt.

28. DISCUSSION I don’t understand why I’m classified this way
Other Considerations & Opportunities
DISCUSSION
I don’t understand why I’m classified this way
DOL outlines whether jobs are Exempt from Overtime Pay or Not
Your job falls in the [X] category based on income and the essential duties of your job
Complying with federal laws is part of our obligation to you
At our firm, we always try to handle employment matters appropriately and to the letter of the law
I’ve never had to track my time before
Cool to Clock / Helps us stay on top of job costing / We’re all doing it
New to all of us
I thought I’d be getting a raise
Our intent is to comply
Clarify your pay review/merit process

29. OVERTIME POLICY/MISINTERPRETATION
Other Considerations & Opportunities
OVERTIME POLICY/MISINTERPRETATION
Work week begins 12:00 a.m. on Sunday a.m. and ends 11:59 p.m. on Saturday night.
Although employees are normally scheduled for a 37.5 hour workweek, overtime payments do not commence until the employee exceeds 40 hours in a workweek.
Supervisors are required to obtain approval from managers prior to the use of overtime. Employees who anticipate the need for overtime to complete the week’s work must notify their supervisors in advance and obtain approval prior to working hours that extend beyond their normal schedule. Although overtime payments do not commence until the employee exceeds 40 hours in a workweek, approval is required for hours that exceed 37.5 hours in a workweek.

30. OVERTIME POLICY/MISINTERPRETATION
Other Considerations & Opportunities
OVERTIME POLICY/MISINTERPRETATION
During busy periods, the employer may require employees to work extended hours.
Supervisors who authorize staff members to work overtime without prior approval from management will be subject to disciplinary action. Supervisors who continually rely on the use of overtime hours to complete a week’s work without it being deemed as extenuating circumstances by management will be subject to disciplinary action.
Employees who fail to obtain approval prior to working hours that extend beyond their normal 37.5-hour workweek will be subject to disciplinary action. Overtime offenses may result in termination.

31. EMPLOYEE COMMUNICATION PIECES
Other Considerations & Opportunities
EMPLOYEE COMMUNICATION PIECES

32. CLARIFICATIONS Overtime is time worked over 40 hours per week.
Other Considerations & Opportunities
CLARIFICATIONS
Overtime is time worked over 40 hours per week.
Vacation, sick, holiday, personal day or other PTO time, that is not included in the 40 hour calculation.
Employers must pay for unapproved overtime pay. If employee doesn’t adhere to your overtime approval process, follow your counseling and discipline process.

33. TIPS Make it easy Web based system, time clock, other
Other Considerations & Opportunities
TIPS
Make it easy
Web based system, time clock, other
Nonexempt with standard hours
Audit it / make sure that what you decide to do gets done
Start now

34. THANK YOU
THANK YOU!