Mainebiz

V O L . X X I I N O. X I I I J U N E 1 3 , 2 0 1 6 20 G reg Dugal, president and CEO of the Maine Restaurant Association, readily admits the salary threshold for employers to avoid pay- ing overtime when salaried employees work more than 40 hours is too low and needs to be hiked. At $23,660 per year, or $455 per week, the threshold hasn't changed since 2004. But more than doubling it in one fell swoop to $47,476, or $913 per week, is going too far and too fast for Maine restaurant owners who collectively employ more than 66,000 workers, he says. Add it to a list of concerns business owners face. "A lot of our members are still reeling from the Affordable Care Act," Dugal says, adding that the upcoming November referendum to raise the minimum wage from $7.50 per hour to $9 is yet another worry for the association's member restaurants. e cumulative impact of all three mandates would pose a significant challenge for Maine restaurants, which account for roughly 11% of employment in the state and $2.2 billion in projected sales in 2016. "You start ending up in negative territory on your margins," he says. e U.S. Department of Labor estimates the new OT rule, which takes effect Dec. 1, will auto- matically extend overtime pay eligibility to 4.2 mil- lion workers nationwide. In Maine, anywhere from 16,000 to 64,000 salaried workers could be affected, according to a state-by-state analysis compiled by U.S. Sen. Elizabeth Warren, D.Mass. Julie Rabinowitz, director of policy, operations and communication for the Maine DOL, says it's difficult to gauge the precise number of salaried workers in Maine that will be affected. e hospitality, restaurant and retail industries could be hardest hit because of Maine's dependence on tourism and their reliance on assistant managers, she says. Nonprofits and startups are also likely to be particularly impacted by the rule. Four basic options New overtime rules will sweep broadly across Maine's economy, says Douglas Currier, a partner at Verrill Dana and chairman of the law firm's labor and employment group. He encourages employers to evaluate all of their sal- aried employees who are now under the $47,476 thresh- old and apply a standard "cost-benefit analysis" to each of the four basic ways of meeting the DOL's new rule by Dec. 1. Whatever their decisions, he says, it's critical to communicate openly and frequently with employees about any changes and the reasons behind them. Step 1 involves determining if the new overtime changes will affect your business: If all employees are hourly and are not specifically exempted, the standard Federal Labor Standards Act overtime requirement of paying at least time-and-a-half for every hour over 40 still applies. Salaried employees who fall between the old and the new OT threshold, on the other hand, will be affected and the employer will have to evaluate how best to meet the new requirements. Step 2 involves making a plan for compliance. Currier says employers have a wide range of options and that they should choose what works best in bal- ancing the corporate and employee interests. Editor's note: A sidebar on Page 22 offers four ways companies can prepare for the new overtime rules. Morale issues could follow any changes Simply changing salaried employees to hourly could lead to other issues, says Currier. "e first question is, 'How will this impact employee morale?'" he says. "I think it's going to be a huge issue for someone to go back to being an hourly employee after they've been an exempt salaried employee, even if the weekly pay remains the same." e second problem he foresees: Formerly sala- ried employees who become paid by the hour might reasonably worry about losing pay if the hourly rate and workload combination translates to a smaller paycheck. "ey're going to feel as if they are going through a demotion," he says. "And what does this do for their chance of promo- tion?" he adds, acknowledging that the status of being a "salaried" employees is typically higher than being sim- ply an "hourly" employee, both internally and externally if that employee decides to move on. Doing nothing and hoping for the best is not an option that Currier recommends: An employer who fails to meet the new OT regulations and is taken to $0 $10K $20K $30K $40K $50K '16 2010 2000 1990 1980 1970 1960 1950 1940 1940: $2,400 1949: $3,900 1958: $4,940 1963: $5,200 1970: $6,500 1975: $8,060 2004: $23,660 2016: $47,476 Businesses wary about new overtime rules New OT rules take effect Dec. 1: Here's what you need to know B y J a m e s M c C a r t h y F O C U S Changes to overtime salary threshold Overtime rule: Are you affected? S O U R C E : Verrill Dana Is the employee currently paid overtime for hours worked over 40 in a week? Why isn't the employee paid overtime? Is the employee paid less than $47,476 per year? Because I am confident this employee is appropriately classified as exempt Change in pay practice or classification necessary. N O T A F F E C T E D CALL AN ATTORNEY NO NOT SURE YES YES NO

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