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Preparation Strategies

Proposed Changes to FLSA White Collar Exemption Rules

By conducting an internal audit (as described in the previous section), employers can identify any misclassifications and determine who will be eligible for overtime if the proposed rule is implemented. Make sure to review job descriptions for accuracy, especially for employees whose roles may have changed over the years.

You can then use the information gathered from an internal audit to develop the best course of action for your business. Since the new rule will affect so many facets of your business, thoroughly understanding what employees will be impacted and how much these changes could cost your business is key.

The following are a list of strategies your business should consider when determining how to best prepare for the new overtime rule.

1. Adjust Wages: As previously mentioned, one way for employers to get around the new overtime requirements is to give employees who are close to the salary threshold a raise. The infographic below outlines the benefits of this approach.

2. Assess Benefits: Any benefit cuts must be carefully assessed. The financial impact of the changes should be carefully compared to the indirect financial impact of the changes (employee satisfaction). Other indirect impacts could be increased turnover costs if employees decide to look for better paying jobs or for jobs that offer overtime pay.

3. Review Overtime Policies: To limit overtime expenses, some employers may develop more stringent overtime policies that send employees home after exactly eight hours. While such a policy can encourage a healthier work-life balance for employees, it may also result in output decrease.

4. Review Time Tracking: Another area that employees need to worry is time tracking. Because more employees will now be eligible for overtime pay, having a system in place that carefully records their time spent working will be crucial.Talk through overtime changes with management.

  • Make sure that your system is capable of efficient time tracking.
  • Allow IT plenty of time to develop and install new procedures.
  • Test out any system changes prior to the overtime rule taking effect.
  • Identify and resolve any bugs early on.

5. Analyze Workflows: Employers should use the proposed overtime rule as an opportunity to examine existing workflows to identify areas for improvement. If employees are regularly staying late, it is important to understand why and see if there are any processes that can be streamlined. Consider asking managers and supervisors for input on how to improve workflow, or even distribute a short survey that employees can take anonymously that asks questions.

6. Develop a Communication Plan:  Given the significant impact the new rule could have on employee satisfaction, developing an effective communication plan is key. The earlier you start, the better. To ensure that your message is reaching your employees, use a wide variety of communication platforms—including email, intranet postings, group or individual meetings, PowerPoint presentations and social media. When crafting your message, consider the following strategies:

Explain the “why”. In addition to providing an overview of the new overtime rule, explain why changes are being made and how these changes will support the company’s goals.

Be transparent and honest in your message. Don’t sugarcoat things, but try to be positive (even if benefits are being cut). Make sure to emphasize that each employee and the work he or she does is appreciated.

Avoid legal jargon. Avoid getting into too many legal or technical details since this may confuse employees. Keep language simple and straightforward.

Provide an FAQ. Consider putting together a list of frequently asked questions so employees have an easy resource they can reference for their questions. This may also help reduce the amount of emails or questions human resources professionals will get on the issue.