Will the new overtime rule affect your payroll with employees overtime wages? Hustle, take the time to figure this out. I am referring to the Department of Labor’s (“DOL”) new overtime rule that increases the overtime exemption threshold from $23,660 to $35,568 effective on JANUARY 1ST, 2020. Time will run out. If you have employees then don’t put this off until it’s too late. The deadline to comply with the DOL’s new Fair Labor Standards Act regulations is exactly 56 days away. Figure out today whether you need to pay employees overtime wages or not.
PERFORM A SELF AUDIT ON PAY PRACTICES
Most employees prefer to earn a salary because then they don’t worry about tracking their time. A “salary” is defined as a “fixed regular payment.” Most employers have chosen to pay a salary to avoid having to pay overtime wages. With the new overtime wages law, for an employee to be salaried-exempt going forward, certain criteria are required:
- The employee must be paid on a regular salary basis, with the requirement that the pay not be reduced based on quality or quantity of work and must be paid even if no work is available.
- The salary must be no less than $35,568 (can include bonus and commission pay).
- The employee must also meet the required job duties under these 5 job categories: Executive, Professional, Computer, Administrative, and Outside Sales.
TALK TO YOUR EMPLOYEES INDIVIDUALLY
Another reason to take action now is that Utah law requires that employers give notice to an employee whose wages may be changed prior to the actual change. Thus, if you decide that a certain employees’ hourly will be reduced to compensate for the required overtime, you are obligated to notify the employee BEFORE January 1, 2020. Its time to have those conversations so your employees understand why you are changing their pay rate, or if you are requiring no more overtime wages. Each person will react differently, so do not underestimate the value of communicating directly with each individual employee who will be affected by your changes.
DOCUMENTATION PROTECTS YOUR BUSINESS
Change opens the door to mistakes and legal action. As you make these changes and talk with your employees, make sure you document what you discussed, the date, and who was involved in the conversation. Arming yourself with correct and accessible records is one of the best ways to protect your business. Also, keep records of employees’ hours for at least 3 years in case a dispute arises. The statute of limitations is 2 years but the DOL can go back up to 3 years for willful violations.
NOW IS A PERFECT TIME TO IMPLEMENT
Don’t wait until January 1st if you want to avoid an administrative nightmare. Reclassifying an employee from exempt to non-exempt could wreak havoc on your payroll calculations. For example, if you make any changes on a day in the middle of a payroll, your reclassified employees will be exempt for half of the week, and nonexempt for the other half. Good luck with processing that payroll!
Check this post for more details about your obligations under this new law: https://danaballlaw.com/does-the-new-ove…fect-my-business/
Act fast to protect your business and avoid making a mistake with employees overtime wages. Get in touch with us for more details. You’ll be surprised how easy it is to work with us!