Making Sense of Overtime Law Changes Katie Magoon www.peoplesolutionscenter.com

Pop Quiz Does the # of employees matter? Are non-profits covered? Does this include the office manager? Do commissions count? Are school districts covered?

Fair Labor Standards Act? Law which governs: Overtime pay requirements Minimum wages Child labor laws Record keeping

Who is eligible today? All employees are eligible for overtime pay unless they meet all three of these criteria: Salary > $455/week or $23,500/year job duties under “exempt” categories salary vs hourly  

Confused? Exempt vs Non-Exempt

Confused? Exempt Meet all 3 criteria OT NOT required “Because they meet the criteria, they are exempt from the law requiring OT pay” Non-exempt 1 or more criteria are not met OT is required “Because they do NOT meet the criteria, they are NOT exempt from the law and must be paid OT.”  

What’s new? All employees are eligible for overtime pay unless they meet all three of these criteria: Salary > $913/week or $47,476/year job duties under “exempt” categories salary vs hourly  

Do commissions count?

Do commissions count? Outside sales position? Yes? No? No OT required Paid minimum quarterly? Bonuses & Commission do not count! No OT required Count up to $4,756

Pop Quiz OT required? Inside Sales Rep $43,500/yr + $4,000 commission (paid mthly) $35,000 + $15,000 commission (paid mthly) No OT required! OT required!

Pop Quiz OT required? Restaurant Manager $40,000/yr + $10,000/yr in tips Website Developer $44,000 + Christmas bonus $5000 OT required! OT required!

Is salary all that matters? Job duties!

Job duties test? Roles must fall under 1 of these 7 categories to be exempt: Executive Administrative Professional Creative Professional Employee Computer Employee Outside Sales Highly Compensated

Avoiding Errors Do NOT assume! Look beyond job title Complete job duties tests Accurate job descriptions

Options for Compliance Increase annual salary Pay overtime over 40 hrs/wk Limit # of hrs/wk Reduce hourly rate, pay OT

Options for Compliance Consider alternate staffing options Temporary or contract staff Reassign responsibilities Supplement part-time staff Bonus or commission plans

What if I don’t comply? Legal ramifications: Back pay + interest “Willful” = $10,000 + up to $1,100/violation Prison? Culture ramifications: Turnover Disengagement Union campaigns

What do I do now? Apply salary tests Review job duties test Select strategy for compliance Create change management plan Update job descriptions Deadline – December 1, 2016

How can we help? Write job descriptions Complete job duties review Consult on change management

Need Help? Katie Magoon katie@peoplesolutionscenter.com (314)308-3224 www.peoplesolutionscenter.com

What do these mean? Executive: customarily directs the work of at least 2 or more full-time employees authority to hire and fire Administrative: performance of office or non-manual work exercises discretion and independent judgment w/matters of significance Includes HR professional, Marketing Specialist Typically not Administrative Assistant Professional: Work require advanced knowledge in a field of science or learning Requires prolonged course of specialized instruction Example: Chemist or Professor

What do these mean? Creative Professional Employee: Work requiring invention, imagination, originality or talent Includes graphic designer, copywriter, website developer Computer Employee: Works as computer systems analyst, programmer, software engineer or similar work in the computer field Outside Sales: Primary duty of making sales or obtaining orders Must be regularly engaged away from office Highly Compensated: Performs office or non-manual work Performs at least one the duties under executive, administrative or professional exemptions Makes a minimum of $100,000