We planned, we were ready to implement — we were stopped in our tracks. Last Fall, many companies – small and large – prepared to implement new over time ruling. The yearly compensation threshold was going to change significantly, and many of us scrambled to review job descriptions, yearly compensation, and FLSA definitions.

The regulation was put on hold by a federal judge in November of 2016.
Recently, the Department of Labor (DOL) has been toying with the idea of changing the ruling, but still implementing something. According to the Washington Post, the Secretary of Labor is looking at the regulation in a few ways. To begin with, the Over Time ruling has not been updated in more than 10 years to keep up with rising expenses of employees. Conversely, the previously proposed compensation threshold would double, possibly creating large increases in business costs.

In one way, this reminds me of home ownership. You keep putting off costly repairs, and when you have no choice but to address the issue, the cost has risen due to additional repairs caused by lack of addressing the original repair. 10 years is a long time to not address and/or set out a plan for review of a significant regulation – particularly part of the FLSA rulings we stringently abide by.
So, what does this mean for your organization?

For those of you who prepared to implement the ruling last Fall, most of your work will remain valid. Any changes would most likely be based on the threshold in a new ruling. For those of you who decided to take a chance and wait it out, without addressing the issue, now is the time to start the process. It is a great time to do a general review of your job descriptions and their FLSA designations. Make sure you are paying people appropriately, based not only on Federal regulations, but those of your state. As an example, according to the DOL website, “Normally, overtime pay earned in a particular workweek must be paid on the regular pay day for the pay period in which the wages were earned.” Seems simple, but something to review as you might be surprised as to how OT is being reported and paid.

The general consensus seems to be that there is a need for review and adjustment. The question is, how much? Additionally, effective employee communication will be of the upmost importance. There will be employees that expect their compensation (not including OT) to be raised, based on their interpretation of the regulation. There may also be employees that need to be reclassified from exempt to non-exempt. As you all know, these kinds of changes can bring about visceral reactions. People may have a perception of being moved from exempt to non-exempt as a demotion, or having their position devalued. Many people view the move from non-exempt to exempt as a badge of honor and work well done; they do not see it as a regulatory definition. They will need real information regarding the regulations, and that this has nothing to do with their value.

In the whole scheme of things, you could put the over time ruling in the wait and see bucket. However, taking the opportunity to plan ahead now will help you have an easier experience when the time comes.

Mercer PeoplePro Can Help
If you’d like assistance on the over time ruling or any other HR need, Mercer PeoplePro is standing by and ready to help. Visit MercerPeoplePro today to schedule an appointment and enjoy a free consultation, plus 2 free hours towards your first project.
Written by Mercer PeoplePro Growing Your Business specialist, Ruth Baylis