As has been widely reported, the Obama administration and the Department of Labor have proposed adjustments to the Fair Labor Standards Act’s white collar overtime exemptions. The most recent proposed change is to the “salary basis” test. The proposed rule increases the annual salary from $23,660 to $50,440 for an employee who performs exempt duties to be considered exempt from overtime.
This proposed changed, issued on June 30, 2015, represents a pretty significant bump from the previous level and is estimated to potentially impact over 20 million workers. The rule changed also confirms two things previously noted in this blog: 1) the pendulum continues to swing in favor of expanded (some would say renewed) worker’s rights and protections and 2) the renewed importance of measuring worked time.
We offer no comment on item #1 other than noting the trend and offering help to employers on ways to as efficiently as possible manage and administer their human capital in whatever labor market and regulatory environment prevails at the time.
With regard to item #2, we reiterate: time matters. It is quite possible, depending on the nature of your business, that this proposed rule change will add yet another segment of your workforce that you will have to carefully track and monitor their worked hours. It would be good, therefore to review a few key reminders for successfully and efficiently tracking worked hours for your employees:
- Capture worked time WHERE is happens When it happens. Avoid having employees report hours after the fact (e.g., filling out a sheet at the end of the week) or having supervisors approve hours from a central administrative office that doesn’t have line of sight of the actual workers posting their hours
- Capture time worked electronically from the beginning. Every manner of device is now available for workers to clock in and out including purpose-built badge readers, touch screen time clocks, computer kiosks, smartphones, dial in systems, biometric hand readers, tablets, and more.
- Handle time information only once. Find systems that are unified, and if that is not possible, at least interface. Re-keying is death to efficiency and accuracy.iting down their hours, then having a payroll administrator key those hours into a payroll system, then having a benefits person key those same hours in on an ACA report is inefficient, costly, and prone to error.
- Make information on worked hours available to those who need it. Make sure employees have visibility to their hours so they can be held accountable. Make sure supervisors can see their direct reports’ hours so they can catch errors early, and make sure managers or department heads can see hours so they can manage overtime and labor budgets, before it is too late.
- Let your system manage rules, reminders, and notifications. With increased importance around worked hours and the increasing array of regulatory rulings that hinge on worked hours (salary-based overtime exemptions, Affordable Care Act applicable large employer mandates and reporting, municipal and state mandated sick leave policies, FMLA among others), effective HR and payroll managers lean on their systems to remember deadlines, notify about thresholds, and manage complex and often interconnected labor regulations.
This latest proposed rule change, scheduled to go into effect in 2016, is the latest, but certainly not the last, change for employers to manage with respect to administering their workforce. Successful employers will continue to invest in smart automation and time capture solutions to continue to profitably operate their enterprises, remain complaint, and compete effectively.