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Local lawyers analyze overtime rules changes coming in December
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Employers should prepare now for new wage and hour rules that take effect Dec. 1, two attorneys specializing in labor law said Thursday.

Madeline Wirt and David Dickerson, with Whelchel, Dunlap, Jarrard & Walker, spoke for the third time to a packed house at the Greater Hall Chamber of Commerce.

More than 50 people from a variety of companies attended the seminar.

The primary change will be to increase the salary level for exempt employees — those not included for overtime pay after 40 hours a week.

The salary standard, proposed by the U.S. Department of Labor, would be raised to $47,476 from the current $23,660. The standard has been the same since 2004, Dickerson said.

He said when the DOL proposed the new standard it received about 290,000 comments during the public review. The Society for Human Resource Management said the change would be “too far, too fast,” Dickerson said.

He also noted the DOL said if the standard were to be set using the cost of living index since 2004, “we’d really be in the $60,000 range” for the salary.

A second significant change, he said, is that the standard will be revised every three years, beginning Jan. 1, 2020. The DOL estimate for the first revision would increase the salary to $51,168.

Dickerson said the rule is being revised because the Obama administration contends that “far too many employees in this country are working over 40 hours a week and not being compensated.”

He suggested that companies should look closely at what employees are “doing day-by-day.”

Three classes of employees can be exempt, based on duties, he said. Those are executive, administrative and professional.

Wirt noted administrative employees are “probably the class that is used incorrectly the most.”

She urged employers to be “sure that you’re classifying them correctly.”

Dickerson outlined one scenario that involves an administrative employee who is now exempt, makes $42,000 and works 40 hours a week. That doesn’t meet the new salary standard, but he characterized this as a “very common” scenario.

That person’s salary could be raised to the new level and still be exempt, or the employee could be re-classified as nonexempt — eligible for overtime — with no change in hours or pay. If that occurred, Dickerson said, the employee would then get time and a half if he or she worked more than 40 hours.

Since the employee typically works 40 hours, the change should mean very little in terms of money.

A second scenario would be the same salary but working 50 hours a week.

Again, the employee could be raised to the new salary standard and remain exempt.

He or she could be nonexempt, still work the extra 10 hours and the hourly rate would be recalculated at a lower rate. Ten hours of the work week would then be on overtime rates.

“Perhaps the most important step you can take right now” is to check the number of hours each employee works in a week, Dickerson said.

Wirt noted a workweek should be definite, but it can be any seven consecutive days.

Dickerson added the “biggest change” in the wage and hour structure — and lawsuits — in the past few years is the increasing use of mobile technology and employees working remotely from home.

Wirt said companies should pay for that work, even if a policy is established to forbid it.

“There’s never a time when you don’t need to pay them,” she said.

Dickerson said a routine of answering emails or texts after normal work hours probably requires payment. Accurate recordkeeping for that process is critical, both attorneys said.

Wirt noted that apps are now available to help with recordkeeping. She also said companies may set a policy that if emails are sent after normal hours, employees are not required to respond until the next business day.

Dickerson said communication with employees about changes and training for supervisors will be critical for companies. He said one of the “most troubling” problems at companies is “when supervisors are abusing an employer’s policy.”

Wirt emphasized the complexity of the regulations and calculations of compensation. She said factors to check include compensation based on “nondiscretionary” bonus or use of a company vehicle.

Dickerson also noted that the outcome of the presidential election could change the situation. Hillary Clinton has said she would follow the recommended changes, he said. Donald Trump has suggested a “small business exception.”

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