Helping Businesses Manage Overtime Costs in the Wake of FLSA Changes

By Colin Menchin

You’ve likely heard a lot in recent news about the Department of Labor’s (DOL) proposed regulations that are expected to affect the Fair Labor Standards Act (FLSA) regarding new white-collar exemptions in the near future.

With minimal revisions since the FLSA was enacted almost 80 years ago, significant adjustments regarding overtime pay and minimum wage requirements have been proposed by the DOL. The DOL has proposed these updated regulations to better align with the present-day workforce and economic climate.

To put things into perspective, the current FLSA requirement states that an employee that makes at least $455 per week ($23,660 per year) either hourly or salary and who meet a duties requirement test is considered “exempt”. These exempt employees do not qualify for overtime pay. If passed, the DOL’s new regulations would require that:

  • The minimum salary threshold to be $970 per week ($50,440 per year) in order to be considered exempt from receiving overtime pay.
  • The salary threshold be updated annually to stay level with rising inflation and wage costs.

These new regulations would undoubtedly have a significant impact on most US businesses within the coming months. It would require employers to reassess their entire workforce classification as exempt/non-exempt, increase minimum annual wages of exempt employees, and track all hours worked by non-exempt employees. As a service provider, it is critical that you help to guide these businesses during these potential changes. By providing your expertise in conjunction with a workforce management solution, you can help your clients keep in compliance with the new FLSA regulations and control overtime costs.

You can reduce a business’ compliance risk and overtime costs by offering them a workforce management solution, complete with Time and Attendance, that accurately tracks and documents all employee hours worked, delivers proactive alerts that notify employers of employees breaching overtime, and includes insightful reporting capabilities for both ongoing analysis and proof of compliance.

In this recorded webinar, held on August 20, 2015, by ChrysMarie Suby of the Labor Management Institute and titled “Overtime Best Practices”, you’ll learn 10 helpful strategies to bring to employers for minimizing their overtime costs.

  1. Define the department budget and address OT in hours & percent of Total Worked hours.
  2. Identify a pattern for the use of resources developed from workload demand data.
  3. Define and standardize terms & formulas with division of direct, indirect, education, orientation, and paid not worked benefit hours and FTE’s.
  4. Clearly identify pay incentives, premium pay, bonuses, on-call/call-back.
  5. Monitor OT for both “regular” and “EOS” or incidental occurrences & trend for use & abuse patterns.
  6. Publish schedules with at least 85% of work from “core” employees in the unit.
  7. Require managers to publish schedules with <5% “holes” where shifts didn’t meet target requirements.
  8. Monitor for the 6 underlying drivers for OT bi-weekly & compare to specific criteria.
  9. Identify a pattern for the use of resources developed from workload demand data.
  10. Monitor for the Labor Management Institute’s Target Thresholds to Total Worked Hours.

To get more information on the Labor Management Institute’s 10 overtime best practices, please watch this recorded webinar.

About Colin Menchin:

Colin is a Marketing Specialist at Kronos SaaShr responsible for the inbound and outbound marketing programs of the company along with other responsibilities within the department.

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