Barring something completely unexpected, the new overtime rules—effectively setting a federal minimum wage of $913 per week ($47,476 per year) for most exempt executive, administrative, or professional employees—will take effect on Thursday, December 1.
That Congressional bill to delay the effective date of the new rules by six months? The President promises to veto it if it makes it to his desk. The lawsuits filed by the coalition of States and by the Chamber of Commerce and industry groups to enjoin the new rules? We expect motion practice in the next few weeks.
So assume it’s happening. What is your plan?
- Will you raise salaries of exempt workers to the new minimums? If so, do you still have any “duties test” risks?
- Will you take advantage of your right under the new rule to use bonuses, commissions, or other incentive compensation as a credit toward the new salary threshold?
- Does your workweek coincide with the effective date of the new rule (a Thursday), or does it begin, for example, on the Sunday or Monday before the change? If so, are you prepared to pay your exempt employees at least $913 for the week in which December 1 falls?
- Will you reclassify some employees to overtime-eligible? If so, are your communication plans in place? Are your colleagues in Human Resources, payroll, benefits, and elsewhere prepared for the change in classification?
- If you are reclassifying, are you ready to manage the potential overtime costs? Do your supervisors understand what kinds of hours are considered “hours worked” (e.g., certain travel time, time spent working from home or remotely, time spent using technology for business purposes, etc.)?
- When will you start counting “hours worked” if December 1 falls in the middle of your workweek?
- Have you considered the alternatives to paying reclassified employees on an hourly basis?
- Do you understand what kinds of compensation will have to be included in the “regular rate of pay” for overtime purposes?
The USDOL and the plaintiffs’ bar are ready for December 1. Are you?