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Making Sense of Overtime Law Changes

Get clear on the recent changes to overtime laws and how they impact your business. Learn about employee eligibility, exempt vs non-exempt classifications, job duties testing, and options for compliance. Ensure you stay compliant with the Fair Labor Standards Act.

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Making Sense of Overtime Law Changes

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  1. Making Sense of Overtime Law Changes Katie Magoon www.peoplesolutionscenter.com

  2. Pop Quiz • Does the # of employees matter? • Are non-profits covered? • Does this include the office manager? • Do commissions count? • Are school districts covered?

  3. Fair Labor Standards Act? • Law which governs: • Overtime pay requirements • Minimum wages • Child labor laws • Record keeping

  4. Who is eligible today? All employees are eligible for overtime pay unless they meet all three of these criteria: Salary > $455/week or $23,500/year job duties under “exempt” categories salary vs hourly

  5. Confused? Exempt vs Non-Exempt

  6. Confused? • Exempt • Meet all 3 criteria • OT NOT required • “Because they meet the criteria, they are exempt from the law requiring OT pay” • Non-exempt • 1 or more criteria are not met • OT is required • “Because they do NOT meet the criteria, they are NOT exempt from the law and must be paid OT.”

  7. What’s new? All employees are eligible for overtime pay unless they meet all three of these criteria: Salary > $913/week or $47,476/year job duties under “exempt” categories salary vs hourly

  8. Do commissions count?

  9. Do commissions count? • Outside sales position? • Yes? • No? • Paid minimum quarterly? • Yes? • No? • Bonuses & Commission do not count! No OT required Count up to $4,756

  10. Pop Quiz • OT required? • Inside Sales Rep • $43,500/yr + $4,000 commission (paid mthly) • OT required? • Inside Sales Rep • $35,000 + $15,000 commission (paid mthly) No OT required! OT required!

  11. Pop Quiz • OT required? • Restaurant Manager • $40,000/yr + $10,000/yr in tips • OT required? • Website Developer • $44,000 + Christmas bonus $5000 OT required! OT required!

  12. Is salary all that matters? Job duties!

  13. Job duties test? • Roles must fall under 1 of these 7 categories to be exempt: • Executive • Administrative • Professional • Creative Professional Employee • Computer Employee • Outside Sales • Highly Compensated

  14. Avoiding Errors • Do NOT assume! • Look beyond job title • Complete job duties tests • Accurate job descriptions

  15. Options for Compliance • Increase annual salary • Pay overtime over 40 hrs/wk • Limit # of hrs/wk • Reduce hourly rate, pay OT

  16. Options for Compliance • Consider alternate staffing options • Temporary or contract staff • Reassign responsibilities • Supplement part-time staff • Bonus or commission plans

  17. What if I don’t comply? • Legal ramifications: • Back pay + interest • “Willful” = $10,000 + up to $1,100/violation • Prison? • Culture ramifications: • Turnover • Disengagement • Union campaigns

  18. What do I do now? • Apply salary tests • Review job duties test • Select strategy for compliance • Create change management plan • Update job descriptions Deadline – December 1, 2016

  19. How can we help? • Write job descriptions • Complete job duties review • Consult on change management

  20. Need Help? Katie Magoon katie@peoplesolutionscenter.com (314)308-3224 www.peoplesolutionscenter.com

  21. What do these mean? • Executive: • customarily directs the work of at least 2 or more full-time employees • authority to hire and fire • Administrative: • performance of office or non-manual work • exercises discretion and independent judgment w/matters of significance • Includes HR professional, Marketing Specialist • Typically not Administrative Assistant • Professional: • Work require advanced knowledge in a field of science or learning • Requires prolonged course of specialized instruction • Example: Chemist or Professor

  22. What do these mean? • Creative Professional Employee: • Work requiring invention, imagination, originality or talent • Includes graphic designer, copywriter, website developer • Computer Employee: • Works as computer systems analyst, programmer, software engineer or similar work in the computer field • Outside Sales: • Primary duty of making sales or obtaining orders • Must be regularly engaged away from office • Highly Compensated: • Performs office or non-manual work • Performs at least one the duties under executive, administrative or professional exemptions • Makes a minimum of $100,000

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