On December 1, 2016, the annual cost of classifying most executive, administrative, or professional employees as “exempt” from the overtime rules more than doubles ($23,660 to $47,476). Is your company ready for this change?
- Do you have your list of potentially affected employees?
- Have you compared the cost of increasing their salaries to the new minimum with the cost of keeping their salaries where they are and paying overtime?
- If you raise their salaries to the new minimum, have you considered whether you still have a “duties test” risk?
- Will you take advantage of your right under the new rule to use bonuses, commissions, or other incentive compensation as a credit toward the new salary threshold?
- If you reclassify employees to overtime-eligible, are your supervisors ready to manage the attendant overtime costs? Do they understand what kinds of hours are considered “hours worked” (e.g., certain travel time, time spent working from home or remotely, time spent using technology for business purposes, etc.)?
- Have you considered the alternatives to paying reclassified employees on an hourly basis?
- Do you understand what kinds of compensation will have to be included in the “regular rate of pay” for overtime purposes?
The USDOL and the plaintiffs’ bar are ready for December 1. Are you?