December 1 is fast approaching. If you’re a fleet owner and that day does not resonate with you, you could be in trouble.
On December 1, 2016 major changes to the overtime rule will be going into effect. The U.S. Department of Labor is changing the overtime exemption regulations and that change has the potential to impact 4.2 million employees who are currently classified as exempt. And I am betting some of them work for you.
By way of review, an exempt employee is one that is not eligible to receive overtime pay for hours worked over 40. Conversely, non-exempt employees have to be paid time and a half for any hours they work over 40 in a week.
The big change is in the dollar threshold of the wage for an exempt employee. Prior to December 1 it is $23,600. After that date it jumps to $47,476. In other words full-time salaried employees who earned $455 a week were not eligible for overtime protection under the Fair Labor Standards Act. Next month that weekly amount is $913.
The mostly likely place where fleets will see this play out is with their administrative and professional staff and people like dispatchers, clerks, etc.
If you have not started to take steps to address this change, you already are behind the curve. It is going to become even more critical to accurately track hours worked by employee. You may need to put a new process in place to keep a very close eye on hours worked if you want to control overtime expenses and at the same time, ensure that your business does not suffer.
You have several options for dealing with this change:
- Cap hours worked per week at 40
- Pay the additional overtime for your employees who have been impacted by the change
- Raise salaries so they are higher than the threshold
- Move employees from salaried to hourly
There is no one right solution. Each fleet will have to do some calculations to figure out which option makes the most sense in its operation.
One thing you can’t do is ignore the change because that could land you in big trouble. And if you think this is going away, think again. The plan is to update the salary threshold every three years.
More information about the ruling is available at https://www.dol.gov/WHD/overtime/final2016/