Pay options, scheduling and morale are three of the most important issues employers will need to address now that the Department of Labor has made the new FMLA overtime rules official. Such challenged activities include picking up and putting on equipment, reviewing employer memos, travel time, and at-home work such as answering work-related calls. Although these include “white-collar exemptions”, the Labor Department is emphasizing that employee’s actual job duties, not their title, will determines if they continue to be exempt from overtime pay.
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The rule, which goes into effect December 1, will double the salary threshold for most white-collar salaried workers who earn less than $47,476 per year. That’s because the U.S. Department of Labor, which is responsible for defining and updating the so-called white-collar exemption rules, failed to do so over most of the past 40 years.
The DOL notes that under the rule, employers will be required to raise the salaries of employees to or above the salary level to maintain their exempt status, pay overtime in addition to the employee’s current salary when necessary or evaluate and realign hours and staff workload. Or employers won’t let them work any more than eight hours so they don’t incur overtime costs. The rules were simple: if you were called on to put in extra work, your employer had to pay you extra regardless of whether you received an hourly wage or a salary.
The final version slightly softens some of the worst features of last year’s proposal, knocking down the pay threshold a bit, allowing bonuses and commissions to count toward 10 percent of the sum, and dropping a scheme to expand the range of duties forbidden to salaried managers.
Currently, employees making $23,660 or less per year automatically qualify for overtime after 40 hours per week. With wages flat, the minimum wage low, and the current overtime salary threshold below the poverty line for a family of four, people trying to make a living from work are swelling public assistance and private charity rolls.
U.S. PIRG, a coalition of state nonprofits around the U.S., issued a statement last week saying the new overtime regulations would hamstring its efforts to hold corporations accountable.
“It’s unfortunate that the DOL has burdened so many employees and industries to conform to a compensation standard”. According to the White House, “the threshold is expected to rise to more than $51,000 with the first update on January 1, 2020”. Some owners are talking about cutting base pay for salaried workers to make up for any overtime they’ll now get. This move, the Department said, recognizes the importance these forms of pay play in compensation agreements. Admissions counselors, recruiters and some other non-academic administrative employees, as well as salaried employees in fields like food services or security, also will be eligible for overtime. Policies governing how employees work from home, or whether or not the action is permitted, should also be reevaluated to avoid situations where there is little oversight over hours worked. Much more on the likely constriction of workplace flexibility is to be found in Donald Boudreaux and Liya Palagashvili’s recent Mercatus Center paper, which discusses the menace posed by the rules for the practice of telecommuting (which by its nature makes it hard to track work hours).
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The administration’s rule change would benefit women, minorities and young workers the most, according to estimates from the left-leaning Economic Policy Institute.
