Archives     Advertise     Editorial Calendar     Subscribe     Contact Us    


The New 9 to 5


 

Changes in Overtime Rules have Employers Scrambling for a New Game Plan by Dec. 1

A new overtime regulation issued pursuant to the Fair Labor Standards Act could impact countless hospital employees and other healthcare workers, and employers expect to feel the pinch. On Dec. 1, an estimated 4.2 million Americans now classified as exempt employees could be reclassified as non-exempt workers who are eligible for overtime pay.

Who will it Impact?


Yarnell Beatty

"Employers need to be looking at each job description," advised attorney Yarnell Beatty, vice president of Advocacy for the Tennessee Medical Association. "Those virtually certain to be affected are office workers, LPNs, home health aids, and anyone assisting other professionals with their duties. You'll also have individuals like coders and insurance and billing staff whose salaries might be below the threshold now. There are a lot of things that could happen."

The new rules will raise the current exempt employee salary threshold from $455 per week or $23,660 annually to $913 per week or $47,476 annually. That means employees who make less than $913 per week will be eligible for overtime irrespective of their job duties. Salary minimums will be automatically updated every three years with the first update scheduled for January 1, 2020.

Who will be Exempt?

Employees will be exempt from overtime rules if they meet the new salary level test as well as the standard duties test, which did not undergo changes in this final rule. Under the standard duties test, exempt employees include those classified as a bona fide executive, administrative, professional or outside sales employee.

Another exemption covers those who meet either the weekly salary requirement or make $27.63 an hour and work as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field. There also is an exemption for qualified inside and outside sales staff, which does not include a weekly salary requirement, and is not affected by the new regulation. Highly compensated employees (typically physicians and other diagnosing professionals) currently receiving compensation of at least $100,000 ($134,004 beginning Dec. 1) are also exempt from the overtime requirements.

More Changes


Reid Estes Jr.

Dickinson Wright attorney Reid Estes Jr., member and practice department manager for Labor and Employment, anticipates many employers will switch exempt employees to non-exempt status to avoid a hefty salary hike necessary to preserve the exemption. But for salaried professionals who are accustomed to flexible schedules or working remotely, the move might not be a welcome one.

"If the company makes the decision to reclassify formerly exempt employees, they're going to shift job responsibilities and start tracking hours and will have to have a mechanism in place to track those hours," Estes said. "A lot of managers will see this as a demotion."

Another possible scenario is that pay increases to preserve exempt status might trigger a domino effect, requiring employers to adjust pay upstream. "If you're a manager and everyone under you gets a pay increase, we're going to see salary compression to where the manager is now making less relative to those he or she supervises, which will require adjustments too," he said.


What's an Employer to Do?

Beatty said employers operating close to their margin would have to strategically examine practices like the scheduling of non-exempt employees. "If you have an after-hours component, consider not scheduling the same non-exempt employees for both Saturday and Sunday," he advised. "Look at the cost benefit of paying overtime costs for those newly eligible instead of raising salaries above the threshold."

He also recommended enacting new policies to put a box around overtime and to make sure access to remote technology is controlled so 40 hours isn't exceeded. Employers also should correct errors in payroll immediately so they won't have time to accumulate before an employee starts complaining. Some might institute a 37-hour workweek schedule to allow for some wiggle room or replace full-time, non-exempt positions with part-time positions - a more doable solution for large employers.

"You might also take formerly salaried employees and pay a lower wage but guarantee pay for more than 40 hours, even if they work less," he said. Consider cutting base salaries or raising borderline salaries above the threshold, and look at your bonus structure. Employers also might give bonuses quarterly instead of annually and utilize non-discretionary bonuses and incentive pay to satisfy up to 10 percent of the salary level as allowed by the new rule.

Whatever the solution, it has to be legitimate. "If you're making changes in things like job descriptions to get around a rule, it can't be a paper fiction," Beatty warned. "Start preparing now. Read the rules and do a real assessment of impact. Identify those individuals who will newly come into the requirements of the rule. Do the math and figure out ways to make sure you're not getting yourself in a situation where the bottom line could be impacted, and you'll have to shut doors or cut staff or services. It's all a numbers versus rules exercise."

What Employers Should do Now

Courtesy of the Tennessee Medical Association

  1. Make sure all employees are properly classified as exempt or non-exempt. All employee job descriptions need to be updated and accurate as to what each employee actually does. If downsizing has occurred and an employee no longer supervises others, for example, this should be corrected in a revised job description.
  2. Identify employees who will, or likely will, become overtime eligible on Dec. 1.
  3. Look at your current overtime expenditures vis-à-vis what they might be estimated to be when the rules go into effect. Pay close attention to employees with a salary range near the threshold.
  4. Train staff members who move from exempt status to non-exempt on how the office tracks the amount of time worked.
  5. Update and revise policies. Make sure outdated policies like awarding "comp time" off for overtime worked are removed.
  6. Budget for any cost increases based on any additional employee eligible for overtime when the rules go into effect.
  7. Evaluate staff employment benefits. If a position is reclassified, then benefits might change if your practice has different benefits depending on exempt or non-exempt classification.

RELATED LINKS:

TMA

Dickinson Wright

 
Share:

Related Articles:


Recent Articles

Cancer Care on the Cutting Edge

Nashville physician-scientists are helping lead the way in advancing cancer care.

Read More

The Evolution of Senior Living

The senior living industry is undergoing a makeover as baby boomers shift focus from medical-directed care to hospitality-driven services.

Read More

When Basic Science Becomes a Breakthrough

Noted immunologists joined forces at the recent International Cancer Immunotherapy Conference to discuss the importance of fostering and funding basic science.

Read More

Dr. Meredith McKean Brings New Hope, More Options for Melanoma Patients

Oncologist Meredith McKean, MD, MPH, overseeing Sarah Cannon's Melanoma Research Program

Read More

ONcology Rounds

News of note in cancer research, treatment and partnerships.

Read More

Ascension Saint Thomas Opens Cancer Center

Ascension Saint Thomas recently celebrated the grand opening of their comprehensive new cancer center on the Midtown campus.

Read More

NMGMA 10 Minute Takeaway

Medicare Part B representative from Palmetto GBA offered updates and resources to navigate compliance.

Read More

Improving Quality, Lowering Cost of Care for Seniors

Five years into the Medicare Shared Savings Program, more and more ACOs are beginning to demonstrate the ability to improve quality while lowering costs.

Read More

Planning Ahead: Patients & Power of Attorney

The time to think about a durable power of attorney is long before it's needed. Barbara Moss discusses the importance of the document in healthcare.

Read More

Council on Aging Honors Middle Tennesseans

The Council on Aging (COA) of Middle Tennessee hosted their 27th Annual Sage Awards on Oct. 29. With a belief that aging should be celebrated and embraced and that older adults have a lifetime of wisdom and experience to offer communities, the Sage Awards are presented each year to older adults who have made outstanding contributions to Middle Tennessee.

Read More

Email Print
 
 

 

 


Tags:
Dickinson Wright, Fair Labor Standards Act overtime rule, M. Estes Wright Jr., Tennessee Medical Association, Yarnell Beatty
Powered by Bondware
News Publishing Software

The browser you are using is outdated!

You may not be getting all you can out of your browsing experience
and may be open to security risks!

Consider upgrading to the latest version of your browser or choose on below: