The United States Department of Labor had been contemplating updating the Fair Labor Standards Act (FLSA) for quite some time and in December (of this year) 2016, this proposed update will take effect. And this will have wide-ranging effects in just about every industry and while is being instituted in the United States it will be felt in Canada as several Canadian companies have subsidiaries and/or remote employees in operate in the very regions where this propose overtime rule will take effect.
This change also means that, for several organizations, these upcoming changes will require adhering to; how employees are classified, observing hours worked, how time is tracked and, the manner in which overall compensation is paid. Once this law is enacted, it’s anticipated that companies will have 60 days to comply with these new regulations-and if companies choose not to comply, they will subjected to fines and penalties.
An excerpt from The Department of Labor, states, in part;
“The Department is proposing to update the regulations governing which executive, administrative, and professional employees (white collar workers) are entitled to the Fair Labor Standards Act’s minimum wage and overtime pay protections. The Department last updated these regulations in 2004, and the current salary threshold for exemption is $455 per week ($23,660 per year). With this proposed rule, the Department seeks to update the salary level required for exemption to ensure that the FLSA’s intended overtime protections are fully implemented, and to simplify the identification of nonexempt employees, thus making the executive, administrative and professional employee exemption easier for employers and workers to understand and apply.”
Here are some suggested steps you can implement to align your organization with the upcoming changes:
Deploy a time and attendance solution
Accurately tracking employee time and being able to get real-time reporting be an essential part of complying with the proposed FLSA overtime rule changes. An effective time and attendance solution will make it easy for businesses to know when an employee is approaching overtime, track hours of employees who work on weekends and remote workers who use mobile devices.
Classify Salaried Employees
If some of your employees are making over the threshold amount they may be exempt from overtime if their job duties fall under the category of; administrative, managerial or executive as it’s defined under the regulations. That said, you should be careful, as employees who have, in the past, fallen under these categories have made case they should be paid overtime. Prepare a list of employees whose salaries do not exceed the threshold because they may be entitled to receive overtime once the changes are enacted. Best case, scenario implement a leave management tool that will help automatically monitor and send alerts if when an employee is approaching overtime.
Control Overtime Costs
On the surface, controlling overtime may seem difficult but in actuality it’s not. If you are using paper time sheets to track and monitor overtime, then yes, it does become a herculean task. By why bother using such antiquated methods, when you can deploy a time and attendance solution that which will automatically tell you; which employees that are scheduled for overtime, show you all overtime costs for each day, and distribute hours evenly between employees (using an overtime equalization tool) so, don’t have to employees for overtime hours, when you do not have to. Now isn’t this better than the spreadsheets, you are currently using?
Ultimately, the most important thing is going to be accuracy. Companies need to have an effective system in place, to accurately track time worked by employees and determine any changes they may need to make to ensure, they are in compliance.
To learn about the benefits of a time and attendance solution and how it can help your organization minimize the impact of changes to the Fair Labor Standards Act, go to our website or call us at ; 866.294.2467.