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September 23, 2019

New Federal Overtime Rule Is Coming – Here’s How You Prepare

According to Politico, the White House has finished its review of the U.S. Department of Labor’s proposed new rule for overtime pay, so it is likely the regulation will be released very soon. As proposed and put forward for public comment, the regulation advises setting the salary ceiling under which virtually all workers must be paid time-and-a-half whenever their workweek exceeds 40 hours at $35,308, up from the current $23,660.

While employers wait for the final regulation to be released – based on public comments, the final rule might have some changes from the proposed version – in a recent column in IndustryWeek, compensation and employee benefits expert Elliot Dinkin provided advice about how companies can prepare for the changes, no matter what the final version looks like. Dinkin suggests employers:

  • Review all job descriptions to make sure they reflect the duties performed and review overtime pay practices for existing non-exempt employees to ensure proper calculation of current pay.
  • Conduct a market study of wage rates to determine overall pay competitiveness.
  • Review currently classified exempt employees who will fail the new salary tests as well as the highly compensated employees (HCEs) who fall below the proposed level.
  • Create a list of employees who are currently classified as exempt and earn a base pay slightly above the current threshold.
  • Determine affected employees who will be reclassified and assess whether to convert each affected position to non-exempt, raise the salary level and/or engage in restructuring to achieve the new salary requirement.
  • Determine how operations would be impacted by reclassification and/or salary increases.
  • Before changing compensation, consider the impact of pay equality both internally and externally.
  • Estimate lead time required to implement any changes to payroll and timekeeping systems.
  • Outline how to train new non-exempt employees on timekeeping matters.
  • Draft an internal communication plan.

Click here to read his full column.