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How to Prepare for the Change in Salary Exempt Status

While the new guidelines do not take effect until December 1st of this year, there are several steps that employers should do now to prepare.

  1. Identify employees who are currently earning between the old threshold of $455 a week and the new threshold, which will be $913 a week. This will give you a better idea of the impact that this new guidance will have on your company.

  2. Calculate the number of hours these employees typically work. Most likely, since these are employees currently exempt from overtime, you will need to determine a way to estimate the number. The only way to have precise information is to start tracking their hours now.

  3. Once you know who this will impact and how many hours each of those employees work, you can then perform an analysis to determine whether it makes sense to reclassify them as nonexempt or increase their pay to meet the new requirements. This analysis should consider the employee’s pay, the hours worked by the employee, the means by which the employee would record his or her hours, and how those hours would be managed.

    While reviewing the status of these employees, it is recommended that employers also make sure that all salaried employees meet the “Duties Test” as well. While there are no changes to the duties test, the DoL has stated that there will be a renewed emphasis on this aspect of the law. More information on the duties test can be found on the Department of Labor website.

  4. Some employees will need to be reclassified as nonexempt. Since they are NOT exempt from overtime, you MUST track ALL of the hours that they actually work. This will not only require changes in tracking time, but some behaviors will also need to modified. It will be important to create clear policies for reclassified employees regarding, for example, time tracking, remote work, travel, and email.

    Reclassifying employees as nonexempt will require several changes in their behavior, especially if the employee is required to be available via phone or email away from work. In these cases, recording hours worked outside of the office is critical. Advanced Time has several options available to help you with this. CLICK HERE to request a time to talk with one of our Sales Advisors to review these options.

  5. Develop a plan for communicating the changes. Do not underestimate the impact this change may have on morale. Many employees are assuming this change is going to guarantee them a big raise. Others will see the move to nonexempt as a demotion. Some will be insulted that they will need to account for their time. It is imperative that you carefully think through your messaging and make sure all communication from administration and managers is aligned.

  6. Conduct training for employees who will now be nonexempt to ensure that they understand the new policies. For many of these employees, tracking time is a new concept. They need to understand what they can and cannot do in regard to off-the-clock work: checking email, exchanging texts, and answering calls after hours are now worked time that must be accounted for. This training should also be extended to those managing these newly nonexempt employees. Some of these individuals have never managed nonexempt employers and will now need to understand the nuances of this change.

This is a big change which impacts almost every business. Do not wait until the last minute to figure out how we will address it. See our Resources page to find more information to help your company stay in compliance.(Resources for the New Overtime Rules Change)

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