The long wait is over! Today, May 18, the Department of Labor’s overtime rules changes have been published.
First, the good news
There had been some speculation the DOL might make changes to the “duties test.” However, they chose to leave these criteria as they are, without imposing any additional restrictions or conditions on eligibility for exemption. Whew!
Background: as you probably recall, in order to be eligible for the “white collar” overtime exemption, employees must be paid a salary that passes a specified threshold. Once their salary is high enough to meet the initial threshold, a “duties test” is applied to determine if their job duties qualify them for the white collar exemption. The qualifications in the duties test will remain unchanged for now.
Also, the original changes proposed a salary threshold of over $50,440 a year. In the final published rules, this has been decreased, to $47,476, or $913 per week. Employees who are not paid on a salary basis, or who make less than this amount, will be eligible for overtime. Employees who make a salary of more than $913 per week may be exempt from overtime, depending on the outcome of the duties test.
Read on for additional key provisions plus strategies you can use to manage the effects of these changes
We’ve known for a long time now the Department of Labor (DOL) has been targeting certain industries and types of businesses based on historically high rates of non-compliance with wage and hour laws. And since the beginning of this DOL initiative, restaurants have been on the list.
Presented in the spirit of learning from the experience of others, here are the stories of three restaurateurs who recently got called out for wage and hour violations:
El Tequila LLC and owner Carlos Aguirre
Aguirre operates four restaurants in the Tulsa, OK area. Back in January he was found guilty of underpaying his employees, lying to a federal investigator, forcing employees to lie to a federal investigator, and falsifying payroll and time records. The judge ordered him to pay $2.1 million in back wages and liquidated damages to over 300 current and former employees. Yikes! He’s going to have to sell a lot of margaritas to cover that cost!
Read on to discover the rest of this story, and two more cautionary tales
I started writing about the Department of Labor’s upcoming revisions to the overtime regulations nearly a year ago. For those who haven’t heard, the plans are to update the salary threshold for “white collar exemption.” The current level is $455 a week (about $23,660 a year).
The latest word I’m hearing is that the new rules will likely be published by July, and possibly even sooner, with employers having 60 days to implement them. If you haven’t yet started looking at your options, your time is growing short!
Changes to the salary threshold
A bit of background: generally employers have to pay overtime when someone works more than 40 hours in a single workweek, unless the employee meets certain criteria. The first of these is the “salary test.” This means the employee must be paid on a salary basis — in other words, their pay does not fluctuate depending on their hours worked or production level, as it would with hourly or piecework pay. And that salary must be greater than a certain threshold.
The problem is, the current threshold of $455 per week has been in place since 2004, and now represents a salary that’s below the poverty line for a family of four. So the DOL has proposed to update this salary threshold to a level more reasonable for today’s market.
Read more about the upcoming changes and the actions you should take to prepare
Minimum Wage: California and New York
Both California and New York have recently passed legislation raising the state minimum wage to $15 per hour.
In California, the increase will be phased in gradually, so that businesses with over 25 employees will be required to pay $15 a hour by January 1, 2022. Companies with 25 or fewer employees have an additional year, until January 1, 2023. Beginning with January 1, 2023, the minimum wage will be increased annually for some workers, based on the adjusted U.S. Consumer Price Index. The increase will be no more than 3.5% per year, and the resulting rate will be rounded to the nearest $0.10.
Meanwhile, in New York, the legislature passed (and Governor Cuomo signed) a bill that also gradually raises the minimum hourly wage in New York state to as much as $15 an hour. A tip credit wage is allowed for workers who are customarily tipped; it will be 2/3 of the minimum wage or $7.50 an hour, whichever is higher.
Read on to learn more about these and other developments and their effects on NY and CA employers
Employee handbooks are generally a good idea. They can save organizations a lot of trouble, in a lot of ways.
For instance, in the 2012 case of White v. Baptist Memorial Health Care Corporation, a worker tried to sue the company for a Fair Labor Standards Act violation. She said they didn’t pay her properly when she worked through lunch. The hospital was able to point to a policy in their employee handbook that spelled out exactly what procedures a worker should follow to report they’d worked through lunch. The employee bringing the lawsuit had signed a document stating she’d received and understood the handbook, yet she had never followed the simple procedure to report her working time, nor had she ever followed a second procedure to report payroll errors. The employee’s lawsuit was dismissed.
However, without careful planning, drafting and review, a handbook can actually cause business problems.
Read on to learn about some of those problems and how to prevent them
Not too long ago, the owner of an auto glass shop in Albuquerque, New Mexico, discovered to his chagrin that the Department of Labor (DOL) isn’t messing around when, as part of an audit, they ask for business records. Most of what they ask for are records you’re legally required to keep, and foot-dragging or outright failure to produce those documents tends to raise the investigators’ suspicions.
On June 14, 2014, DOL investigators requested documentation related to his payroll records, sales volume and employee documentation from Walter Dill, owner of the somewhat ironically named ASAP Auto Glass & Detailing. For whatever reason, Dill couldn’t (or wouldn’t) produce the records “ASAP.” On April 7, 2015, nearly 10 months after the original request, a U.S. District Court judge granted the Secretary of Labor’s petition to enforce a subpoena for the records.
You might think that would be enough… and you would be wrong. On May 29, Dill was found by the judge to be in contempt of the order. But the judge still gave him one last chance to comply, scheduling a final hearing on July 15, 2015, more than a year after the original request.
Read the rest to find out what happened at that hearing, and what could have saved him from that fate
Right off the bat, let’s make it clear: tracking employee work time is not a waste of time in and of itself. In fact, it can be key to ensuring business productivity and profitability. As it happens, I’m all in favor of recording work time, not just for hourly employees, but for everybody.
No, the problem is not with tracking time per se — the problem lies with how some businesses go about recording and processing that time.
Handwritten time sheets have got to go
Do you track employee time using handwritten time sheets?
According to a study commissioned by Planview and carried out by Loudhouse, an independent research agency, the number one cause of wasted time during the workday is inefficient processes (44%), followed by an overload of paperwork (43%). According to a survey conducted by Nitro and the PDF Association, over 20% of the productivity loss at the typical business is due to “document challenges,” including reviewing, collecting signatures, and filing/organizing/retrieving documents.
Handwritten time sheets are a big contributor to these problems. They bring with them a number of issues that are costing your business time and money:
Read more to find out what’s wrong with paper time sheets and what to do about it
I just came across this post on the HRMorning website. The author points out that the upcoming changes to overtime regulations may result in many more employees having to clock in and out than before. He speculates that resentment over this might lead some to “take some liberties” with their time reporting, such as:
- Conducting personal business on company time;
- Arrriving late (or leaving early, for that matter) but recording it on their timesheet as “on time”;
- “Buddy punching” for another worker (in other words, clocking in or out on behalf of someone else who isn’t actually present at the time);
- Taking long lunches or breaks but neglecting to record the extra time away from work.
Thing is, if you employ overtime-eligible workers today, these are all issues you’ve possibly been dealing with for years. According to a 2009 Harris Interactive survey, up to 21% of workers admitted to “time theft” — most of them using exactly the same tactics outlined by the author of the HRMorning article! (And if that many admit to it, just imagine how many do it but won’t ‘fess up!)
Read on to find out what you can do about this time theft
As we head into cold and flu season, we’re probably all aware of absenteeism, and the problems it can cause. When employees miss work, others have to cover for them (often with very little notice). As a result of workers taking on unfamiliar duties, tasks can take longer to complete. You may find yourself incurring unexpected overtime. Customers service can be affected. It’s a real problem.
But it turns out, the opposite situation can present an even bigger problem!
“Presenteeism” — A Hidden Danger To Your Business
Your most dedicated employees are just as aware as you are of the issues that absenteeism can cause. Because of their loyalty and dedication to their work, they might consider coming to work despite being sick. They may even feel a bit proud of themselves for “sucking it up” and coming in even while under the weather.
You might be tempted to praise them, or hold them up to others as a good example of someone who “takes their responsibilities seriously.”
This trend — of coming in to work while sick — is sometimes referred to as “presenteeism.” And it can represent an even bigger danger to your business than absenteeism!
Read more to find out why this is a problem, and what you can do about it
I frequently mention what a good idea it is to train your supervisors and managers on wage and hour rules… usually in the context of writing about a company that got in trouble and paid big penalties because of a supervisor or manager’s misguided actions.
Obviously, you say. Training is clearly a good thing, you say. But a surprising number of small businesses don’t offer formal training. Perhaps they start with good intentions, but it’s all too easy to get caught up in the press of day-to-day operations, while training falls by the wayside.
So now it’s my job to try to motivate you. Don’t just talk about the importance of training — schedule training. And not just a one-time shot, but at least annually.
But Why Would I Want To Do This?
I know, annual training seems as though it could turn into a colossal waste of time and money. Here are some very good reasons why it’s crucial:
Read more for the top three reasons why annual supervisor training isn’t just a good idea, it’s crucial!