The Department of Labor has made amendments to the Fair Labor Standards Act that will take effect December 1st of this year. The amendment increases the minimum threshold salary to receive overtime pay of full-time salaried employees from $23,660 to $47,476. This was a necessary shift to adjust for inflation as only seven percent of full-time salaried employees fall under the current threshold. Compared to the 1970s at 60 percent, the projected 35 percent should not have an irreversible effect on businesses. However, for those who feel unprepared to handle the new overtime laws, we have generated a comprehensive check list for adjusting your current business model to comply with the new laws.
1. Identify the salaried employees under the new threshold.
Take note of whom this could potentially affect within your organization. Any personnel that previously made more than $23,660 but less than $47,476 as a salaried employee will be affected by the new amendment.
2. Analyze workloads.
Cross-reference your newly generated list with your expected workload to evaluate the true impact of these law changes on your business. If all of your employees work a standard 40-hour work week, then the new amendment shouldn’t impact your bottom line. However, if you find that some of your employees are working upwards of 60 hours in a single week, then you have much more to consider.
3. Compare the difference between time-and-a-half and an increase in salary.
If your best employees are putting in overtime week after week, you will have to crunch the numbers to see whether or not increasing their salaries above the new threshold will save your company more money than their projected overtime pay. If an employee is just below the new threshold, than it’s a no brainer to give them a nice unexpected raise while keeping you DOL compliant. Employee retention should see an increase and businesses will also benefit from the increased purchasing power of the American worker.
4. Consider ways to increase efficiency.
Think of ways to prepare for your busier seasons during slow times to decrease overtime hours. Are all of your processes maximizing your warehouse’s efficiency? Use this time before December to evaluate and improve your plant’s productivity to prevent major shifts in your payroll.
5. Fill in the gaps.
You’ve crunched all the numbers and it turns out that you can’t afford to increase your current employees’ salaries or pay them overtime. Don’t panic. You can fill in the productivity gaps with temporary or part-time employees at a lower rate than your more-experienced assembly workers or distribution professionals.
6. Inform your team.
Before you make any changes in personnel or hours, be sure to tell your team first. Some companies will need to make some major shifts and their teams should be the first to know, to help make the changes as seamless as possible.
7. Track the numbers and adjust.
Hindsight is 20/20. Don’t expect to predict every hurdle that this new amendment will bring. This law is set to update every three years to better keep up with inflation, so continue to keep a close eye on your finances and make the necessary tweaks to your processes and personnel along the way.
8. Partner with a personnel consultant.
Working with an expert in personnel management can help keep your business successful and compliant. The Reserves Network has a talented pool of Orlando machine operators, Milwaukee logistics professionals, welders in Dayton and light industrial workers throughout the U.S. We specialize in staffing and management for the light industrial industry.
Contact the experts at The Reserves Network to prepare your business for the new overtime laws and fulfill all of your staffing needs.