Four easy steps to prepare for new overtime regs

Employers have less than one month to prepare for the new overtime regulations from the U.S. Department of Labor (DOL). The regulations, which more than double the salary threshold for eligible workers, go into effect on Dec. 1.

The final rule significantly expands the number of workers eligible for overtime pay, affecting an estimated 4.2 million workers nationwide, 73,000 of whom are found here in Colorado. For those employers struggling to find a balance between the upcoming overtime regulations and running a profitable business, here are four steps to manage the change.

Determine if an employee is truly exempt. Under the previous rule, most employees are exempt from overtime pay if they 1) earn a minimum, guaranteed salary each week and work at certain jobs, and 2) earn more than $23,660. Now that the total minimum salary will more than double to $47,476, employers should determine if an employee is exempt, or if they are eligible for overtime pay.

Consider how to address your employees that are exempt. There are a couple of options for employers needing to make a change, including 1) increase salaries to meet the minimum salary threshold, 2) set parameters for, and monitor overtime work, or 3) consider other exemptions under which the employee may fall that do not require a minimum salary. Colorado employers will need to consider the options that make most sense for their bottom line and for their workforce, then set consistent policy and inform employees accordingly.

Assess the options to recover any financial changes. Look at options to recover any financial challenges related to compliance. For example, does it make more sense to raise service and product prices, or hold on pay raises for newly non-exempt employees? Addressing these key factors up front requires collaboration between internal teams to determine what makes most sense.

Ask for help. It can be helpful to have an informed outside entity take a closer look at your internal policy and evaluate your options. Consider tapping an outside organization, where a team of legal and HR professionals can review your specific situation and make recommendations

Although largely seen as a benefit to employees, the new regulations don’t have to be a setback for business owners. Deciding on a strategy before the regulations go into effect will ease the shift in compensation and relieve any associated stress, leaving time for business owners to focus on the growth of their business.

Benjamin Hase an attorney for Mountain States Employers Council’s Denver Employment Law Section. He counsels and represents employers in matters related to benefits, discrimination, pay practices and other employment matters. Prior to joining MSEC, Benjamin worked in private practice and for the State of Colorado, where he managed regional investigation, mediation and training units in Southern Colorado and on the Western Slope.

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