Worcester Business Journal

www.wbjournal.com June 20, 2016 • Worcester Business Journal 21 Don't be a overtime troublemaker E D I T O R I A L The Worcester Business Journal welcomes letters to the editor and commentary submissions. Please send submissions to Brad Kane, editor, at bkane@wbjournal.com. B arring court or Congressional action, millions of American workers will become newly eligible for overtime pay on Dec. 1. Up to now, if a worker performed certain exempt duties and was paid at least $455 per week in guaranteed salary, the employer did not have to pay overtime when the employee worked more than 40 hours during a workweek. On Dec. 1, that $455 salary figure will increase to $913 per week, an annualized salary of $47,476. An estimated 86,000 Massachusetts workers will be eligible for overtime. Employers have several ways to deal with this new rule. One way is to convert these newly overtime eligible employees to hourly employees and pay them for all hours worked, including overtime. Along with this change, employers will usually closely monitor the number of hours worked in order to limit overtime and manage overall labor costs. Affected employees may react differently to being converted to hourly employees. Some employees will be pleased with the changes, some will be unhappy and some will have little or no reaction to the change. Reclassifying employees from exempt to hourly, non-exempt offers overtime options, but some employees may consider it a loss of status. While some employees will welcome the chance for overtime pay, others may see the need to punch a time clock as a demotion. Here are questions affected employees will likely have: • Is this a demotion? • Do I have to change the way I work? • Will I lose my flexibility? • Will I still be able to advance my career? • Will I make less money overall? Train your managers to explain why the change is taking place and how it is not a reflection of how the company views the employee. Train your managers to ensure that all hourly employees are paid for all time worked and that they communicate that this is the main benefit to being an hourly, non-exempt employee. Explain the new timekeeping procedures. Employers must keep track of the time hourly, non-exempt employees work to ensure employees are recording all time worked. Maintain regular communication. Give employees an opportunity to ask questions, voice concerns and have an open dialogue to learn more about the changes. Appoint someone other than the employee's manager as a point person for communication. This person should be someone who communicates well and has a good understanding of overtime law and its classifications. Be proactive. Supervisors should check time cards/ records to be sure non-exempt employees are not working off the clock. Determine which jobs should be converted to hourly, non-exempt. Identify employees that are likely to be affected by the changes. Create your communication plan now that explains the what/why/how/when of the changes to share with affected employees. Review job descriptions to determine whether they are still accurate and reflect the jobs being performed. Review exempt employees' actual job duties to ensure that they still meet the duties test of the white-collar overtime exemptions. Conducting a self-audit now will help ensure that your company is in compliance with the law. n Timothy Murphy is a partner at Worcester law firm Skoler, Abbott & Presser, P.C. Dealing with OT's new rules BY TIMOTHY MURPHY Special to the Worcester Business Journal V I E W P O I N T Timothy Murphy Before the new rules were adopted, business groups across the nation decried the changes, saying it would lead to lower salaries, slower hiring and employee cuts. Labor advocates cheered as – in their minds – the new rules would prevent corporations from working lower paid employees to the bone without ramification. As with all political arguments, the truth lies somewhere in the middle. The time for debate has passed, and the time for understanding the new law and how it affects your organization directly is upon us. Most businesses will need to do some planning and m a k e s o m e accommodations in order to be ready for the new law. Some companies and workers will have to make hard decisions about what constitutes an hourly employee vs. a salaried employee, but regardless of how that divide is handled, the bottom line is we'll all need to get into compliance. Regulations like these – and most laws, frankly – over reach and over direct what an employer can and cannot do. Companies with e qu it able p ers onnel policies have been treating their employees fairly already and will need to make only a few adjustments. Getting into compliance with the new overtime laws will not mean wholesale changes or massive cost overruns – yet another layer of regulatory pain is regrettable. While most are good actors, the business community gives politicians just enough evidence that a slippery slope in personnel policies exists. Just this month, Worcester restaurant Shangri- La was cited $11,000 for violations of state wage and hour laws, allegedly for not providing pay stubs and only paying out wages on a monthly basis. It is announcements like this from the Massachusetts Attorney General's Office that contributes to more burdensome state and federal regulation. Much has been made this political season of the increasingly sharp divide between the working class and the top 1 percent of wage earners in our society, and the effective stagnation of wages for lower- and middle-class workers in our country. There is also little question that concerns over the expanding gap between rich and poor has driven the big increases in minimum-wage legislation in many states. Politicians can be credited for trying to address that social ill – but implementation of new laws can be sudden shocks to the system for many employers, few of whom are among the very wealthy. Doubling the wage threshold where employees are qualified for overtime pay in one fell swoop is a big change, and implementing a scaled change over a few years would have been less disruptive. However, we're now in the u n d e r s t a n d i n g a n d compliance period, so all employers need to get their heads around the change and sort out any changes they need to make in the next five months. Our advice is not to over- react to this legislation. Some salaried employees might have to be converted to hourly, and the responsibilities or work flow of others may have to be reorganized. Despite all the doom and gloom rhetoric from business organizations before the change was adopted that the new rules would lead to layoffs and lower wages, the new $47,476-level doesn't change the fundamental equation that employees are compensated for the value they bring to the company and the company's ability to pay those wages. The structuring of how those wages are paid out – hourly vs. salaried; overtime eligible and exempt – is ancillary to the actual compensation. Yes, these changes will cause some headaches, and the new regulation seems overly burndensome and unnecessary for nearly all businesses. The point now is, though, that you shouldn't have been the employer forcing the worker making $24,000 annually to work 80 hours per week and now you shouldn't be the employer forcing the worker making $48,000 annually to work 80 hours per week. That is what makes lawmakers want to raise the exemption even higher, and that shouldn't happen. n C ome the end of the year, businesses around Central Massachusetts and the nation will be forced to adjust to the new realities of the U.S. Department of Labor's standards of overtime pay. The new law says any salaried employee making less than $47,476 annually is now eligible for overtime pay – more than double the old standard of $23,600 per year. The changes are expected to make 4.2 million additional employees eligible for overtime, including 86,000 in Massachusetts. While most are good actors, the business community gives politicians just enough evidence that a slippery slope in personnel policies exists.

• Cover