Since the U.S. DOL published its new overtime exemption rules, several people have asked me how one goes about converting a salary to an hourly rate that will give employees about the same amount of pay once overtime is factored in. There are really two parts to this calculation – one quite simple, the other a bit harder. Continue Reading Converting Salary to an Hourly Rate
Employer Concerns About The New Overtime Exemption Rules Aren’t A Myth
Every economist knows that there’s no such thing as a free lunch. That’s as true in the labor market as in any other area of the economy, but you’d hardly know that by reading the DOL’s publications promoting its new overtime exemption rules. For example, in a recent blog post, Dr. David Weil, Administrator of the DOL’s Wage and Hour Division, set out to debunk some purported “myths” about the new rules. Reading this post, one is left with the impression that the new rules will benefit pretty much every affected employee with no real burden on employers. Here are some thoughts on these “myths” and the “truths” that Dr. Weil offers in response to each: Continue Reading Employer Concerns About The New Overtime Exemption Rules Aren’t A Myth
Residence Hall Directors Under The New FLSA Exemption Rules
One of the issues that colleges and universities are struggling with under the new FLSA overtime exemption rules is how to compensate residence hall directors. While responsibilities vary from institution to institution, residence hall directors generally are responsible for overseeing students living in a college or university residence hall. Their duties may include counseling students, applying and enforcing rules of conduct, coordinating and scheduling other workers, supervising student RAs, and similar responsibilities relating to the residence hall and its student residents. These positions can meet the “duties” test for exempt status under the administrative exemption, provided that they exercise the required level of discretion and independent judgment in the course of their duties. In some cases they might also qualify for an executive exemption if they supervise at least 2 or more other full-time employees (or more part-time employees whose hours are equivalent to two full-time workers). Residence hall director salaries usually are not large, in part because part of their compensation is typically provided in the form of free room and board. Residence hall directors are often required to live in their assigned residence hall. They often have extensive “on call” hours during which they are expected to be in or near their assigned residence hall, available to respond to any issues that may arise.
This combination of low salary and long “on call” hours is what makes these positions so difficult for colleges and universities under the new rules. Often the salaries for these positions fall far enough below the new minimum salary of $47,479 that a salary increase to the new minimum is not an option. Paying overtime may be equally cost-prohibitive if an employee is required to be “on call” in the residence hall and therefore potentially entitled to overtime pay for extended periods of each week, well beyond a typical 8-hour work day. So what can colleges and universities do with their residence hall directors under the new rules? Continue Reading Residence Hall Directors Under The New FLSA Exemption Rules
What Bonuses and Incentive Payments Count As “Discretionary” Under The New Exemption Rules?
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One of the more surprising changes in the new FLSA overtime exemption rules is a provision allowing certain bonuses, commissions, and incentive pay to count for up to 10% of the new increased minimum salary level. However, the rule provides that only “nondiscretionary” bonuses, incentives, and commissions can be counted. So what exactly does “nondiscretionary” mean?
The new rules don’t actually define “nondiscretionary,” but another part of the FLSA regulations (specifically 29 C.F.R. § 778.211), provides some guidance here. That section discusses which bonuses can be excluded from the “regular rate” used to calculate overtime for non-exempt employees because they are discretionary: Continue Reading What Bonuses and Incentive Payments Count As “Discretionary” Under The New Exemption Rules?
Coaches and Athletic Trainers Under the New FLSA Rules
As schools seek to adjust to the new Department of Labor overtime exemption rules and increased salary standards, nearly every institution has classification and overtime-calculation questions about athletic coaches and athletic trainer positions. The NCAA (in conjunction with CUPA-HR) has now issued a helpful paper addressing exemption analysis and practical considerations applicable to these roles that can be found here. The analysis identifies several options for potentially classifying coaches and athletic trainers as exempt from overtime, which hinge fundamentally on defining each individual’s “primary duty.” That can be tricky, particularly for assistant coaches, given that (1) federal law defines primary duties as the “most important” (which may or may not be those that consume the most time) and (2) coaches are commonly assigned a wide variety of tasks and roles, depending on particular team needs, size of institution, or head coach preferences. Definitive decisions about classification will thus continue to require case-by-case analysis of each coach’s particular situation, but the NCAA’s paper provides several helpful concepts to help frame such decisions.
Highlights of the exemption analysis include: Continue Reading Coaches and Athletic Trainers Under the New FLSA Rules
Thoughts On Payroll By Exception and Weekly Time Sheets
In a recent blog post, Wage and Hour Administrator David Weil tries to underplay employer concerns about the new overtime exemption rules, including worries about the difficulty of tracking time for employees who are not used to recording their hours, stating:
There’s no requirement that employees “punch in” and “punch out.” Employers have flexibility in designing systems to make sure appropriate records are kept to track the number of hours worked each day.
And in the DOL’s information sheets for higher education institutions and non-profit organizations (.pdfs) regarding the new rules, the Department suggests two alternatives to the traditional punch clock setup:
o For employees who work a fixed schedule that rarely varies, the employer may simply keep a record of the schedule and indicate the number of hours the worker actually worked only when the worker varies from the schedule.
o For an employee with a flexible schedule, an employer does not need to require an employee to sign in each time she starts and stops work. The employer must keep an accurate record of the number of daily hours worked by the employee. So an employer could allow an employee to just provide the total number of hours she worked each day, including the number of overtime hours, by the end of each pay period.
The Department is of course correct that either of these methods – the “payroll by exception” approach or the peroding time sheet – can be a permissible method of tracking employee time. The FLSA regulations don’t mandate any particular method of tracking employee time. They require only that the record be accurate. But it’s this mandate for accuracy that makes payroll by exception and time sheets a potentially dangerous way to approach timekeeping under the FLSA.
Continue Reading Thoughts On Payroll By Exception and Weekly Time Sheets
Top 5 Takeaways From Webinar on Final DOL Overtime Exemption Rule
Thank you to those who attended today’s webinar, “New DOL Overtime Exemption Rules – What You Really Need to Know Now.” We hope that everyone enjoyed the presentation and learned information that will assist in getting your organization ready for compliance. A recording of the webinar is available here.
For those unable to attend, here are five key takeaways from the presentation:
- Employers must be in compliance with the new overtime rule by December 1, 2016 (but also check state law for any notice requirements related to change in compensation)
- New minimum salary level is $913 per week or ($47,476 annualized), with salary increases every 3 years
- Identify employees who are at or below the new salary level and decide whether you will increase the salary to meet the threshold, restructure the job or re-classify the position as non-exempt
- Review, update and provide training on wage and hour policies
- Prepare a communication plan for any changes
As always, please contact us if you have any questions.
The New FLSA Exemption Rules and Higher Education
As we previously reported, the Department of Labor has now issued its long-anticipated final overtime exemption rules for white collar workers. In addition, the DOL published more detailed guidance for higher education institutions (.pdf) seeking to comply with the new obligations. As expected, the compensation adjustments mandated by the new rules require substantial effort to balance college and university budgetary constraints, workforce morale concerns, and legal compliance obligations in the next several months.
The DOL estimates that the new rule will result in approximately 35% of all current full-time, salaried workers being eligible for overtime based on their salary level alone. At the same time, increasing so many positions’ salaries to meet the new $47,476 threshold creates substantial concerns with salary compression on campus for positions already above that threshold. To address such concerns and to minimize the need to comply with future increases of the FLSA salary threshold, many institutions of higher education are likely to seek to convert positions to non-exempt status; at the same time, they will need to address employee-morale concerns related to such a conversion and diligently manage the number of hours or methods of compensating for overtime wherever possible for budgetary reasons.
As schools determine the best approach for seeking to adjust to the new rules, the guidance issued yesterday as well as a white paper that we prepared earlier this year offer ample advice specific to higher education institutional needs and concerns. Examples of key components of the guidance include the following:
Continue Reading The New FLSA Exemption Rules and Higher Education
Paying a Fixed Salary for a Fluctuating Workweek – Or, How To Pay Half-Time Overtime
Note – This post has been updated to correct a calculation error noted below.
The impending increase in the minimum salary for the executive, administrative and professional exemptions under the FLSA has many employers looking for ways to manage overtime costs for newly-reclassified employees. As part of that search, you might have heard of this idea called the “fluctuating workweek method” for calculating overtime as one alternative that can yield major savings. So what is this method, and how does it work?
Webinar: The New Overtime Rules for Executive, Administrative and Professional Employees Are Here – What You Need to Know Now
FRANCZEK RADELET WEBINAR
Date: Monday, May 23, 2016
Time: 12:00 – 1:00 p.m. CST
Please join us for a webinar lead by William R. Pokorny and Staci Ketay Rotman as they give us an overview of the U.S. Department of Labor’s new overtime rule for white collar employees. This rule affects both public and private employers and has far-reaching applications in nearly every industry across the country.
Employers must prepare to address any potential employee misclassification before the rule becomes effective on December 1, 2016.The webinar will discuss:
– The background leading up to the new rule
– What is covered by the new rule
– What did not make the cut
– How to prepare for implementation