The Department of Labor (DOL) new overtime rule goes into effect December 1, 2016 and employers have questions.
The new overtime rule says most salaried workers earning up to $47,476 a year must be paid time-and-a-half overtime pay if they work more than 40 hours during a week. Under the old overtime rule put in place in 2004, the cutoff for overtime pay was $23,660. The new rule is expected to make 4.2 million more workers eligible for overtime pay.
DOL did seven webinars on the new overtime rule - available here - and has released a list of frequently asked questions asked by employers preparing for the change. Here are some that may pertain to your business:
Q. We are a seasonal property open 8 months - is the $47,476 based on that or 12 months?
A. The new salary is $913 per week. During the eight-month period that employees work at your property, you will need to guarantee that at least $913 per week is paid for an exempt employee. Please see FOH 22g10 concerning rules for annual salary earned in a shorter period, which can be found at the following link: https://www.dol.gov/whd/FOH/FOH_Ch22.pdf.
Q. What is the salary requirement for part time salary workers?
A. Whether a worker is full-time or part-time, the standard salary level to qualify for exemption will be $913 per week.
Q. Comp Time: Are comp time programs still allowed? Meaning that any hours over 40 hours can be banked to use later to either take time off or maybe get paid at end of year at straight time?
A. Only employers that are public agencies under the FLSA (e.g. a state government) can provide comp time in lieu of overtime premium payments.
Q. If the employee is being paid hourly but all the duties are applicable should he be paid salary instead? If this employee wants to stay being paid hourly should it be documented and signed by the employee?
A. Employees paid on an hourly basis are generally entitled to overtime pay, even if they satisfy the duties requirements for exemption. Employers are not required to pay employees who satisfy the duties test on a salary basis unless the employer intends to assert the exemption and not pay overtime.
Q. Are blue collar workers (i.e. mechanics) able to be classified as salaried exempt or must they be hourly?
A. Blue collar workers like mechanics will not qualify for exempt status because they do not pass the duties requirements for exemption, so they are entitled to overtime pay unless another exemption applies. However, nonexempt employees do not have to be paid on an hourly basis.
Q. If someone is paid a salary to work Monday through Friday and only works 4 days instead of 5, is the new rule stating we have to still pay the full salary for the week?
A. Yes, employees who perform any work in a workweek must satisfy the full standard salary level test to retain their exempt status. This is not a change from the current regulations. For information on permissible deductions, see 29 CFR 541.602.
Q. Will OT be calculated on over 40 a week or 8 a day? Thank you.
A. Under federal law, an employer's obligation to pay overtime pay is always calculated on a workweek basis, not a daily basis. For employees entitled to overtime pay, employers are obligated to pay an overtime premium for any work hours performed beyond 40 in a workweek.
Q. I have field technicians who are salaried employees - and are paid more than the $47k+ salary level - but who do not meet the EAP duties tests. They often travel to remote sites to perform field work, and some perform work at night when required. Under the new rules, are these employees entitled to pay for travel time (which might bump them over the 40 hr/wk threshold); and are they entitled to OT pay for night shift work? For example: if a field tech is scheduled to work nights during one week and works only 40 hours, no OT would be required.
A. If an employee does not meet the duties test under the EAP exemptions, then they are not exempt and must be paid overtime pay after 40 hours in a workweek. The Department's travel time regulations have not changed and should be applied appropriately to hours worked. See 29 CFR 785.
Q. Is the amount/week calculated before or after taxes?
A. Thanks for your question. The Department looks at an employee's gross wage amount before taxes.
Q. What are the penalties for employers for non-compliance with the new OT rules?
A. Under the FLSA, employers in violation of the law may be responsible for paying any back wages owed to their employees, as well as additional amounts in liquidated damages, civil money penalties, and/or attorney fees. See 29 U.S.C. 216. See also Fact Sheet #44: https://www.dol.gov/whd/regs/compliance/whdfs44.pdf.
Q. How should warehouse workers who move product onto a truck and occasionally drive the truck to various locations be classified? Do they fit under the Fact Sheet #19 Motor Carrier exemption?
A. The Section 13(b)(1) overtime exemption does not apply to employees who are not engaged in "safety affecting activities", such as dispatchers, office personnel, those who unload vehicles, or those who load but are not responsible for the proper loading of the vehicle. Only drivers, drivers’ helpers, loaders who are responsible for proper loading, and mechanics working directly on motor vehicles that are to be used in transportation of passengers or property in interstate commerce can be exempt from the overtime provisions of the FLSA under Section 13(b)(1). See https://www.dol.gov/whd/regs/compliance/whdfs19.pdf. For further information, please see: https://www.dol.gov/whd/FieldBulletins/FAB2010_2.pdf.
Q. If taking a flight for a business trip, do we pay for time at the airport and flight?
A. Travel away from home is clearly work time when it cuts across the employee's workday. The employee is simply substituting travel for other duties. The time is not only hours worked on regular working days during working hours, but also during the corresponding hours on non-working days. Please see 29 CFR 785.39 for additional information.
You can also submit questions about the overtime rule to the Wage & Hour Division on the DOL.