Are You Ready?
What is one of the costliest expenses for a business? People. Good people are key to the implementation and execution of a business. Without the right people things fall through the cracks and the entrepreneurial passion and vision can be lost. As difficult as it can be to find good people, it seems it is tougher than ever to retain those key individuals (especially with Millennials).
The new overtime rules appear to make it even more challenging. As of December 1, the new salary threshold for exempt employees is $47,476. Up from $23,660, which was last updated in 2004. The Department of Labor (DOL) has crammed 12 years of cost of living changes into this new number. This is a big adjustment for employers who have not had much focus on the salary threshold and have mainly been using the DOL’s job description requirements to classify employees. Now it’s just the opposite. The salary takes precedent over the job description.
Bottom lines and employee morale are impacted by these changes. Obviously, both are vital to the operation and growth of a business. With a proactive and respectful approach, the frustrations of change for businesses and their employees can be avoided. Key employees typically respond well to honesty and the understanding that we are all in this together. So, staying ahead of the curve and having conversations with employees can pay off in the long run.
Here are some things to think about when approaching implementation of the new overtime laws:
Bottom Line Items
The numbers to hone in on are the exempt employees’ base salary + nondiscretionary bonuses (the max bonus dollars that can be used is $4,747.60).From there, determine whether it is financially feasible to bump the employee up to the threshold. Calculate the cost increase to include the business portion of payroll taxes.
Only speak with the employees who are going to be affected and clearly explain to them:
-The changes to the law and who is responsible for the changes.-How this will affect them and their job structure.-What they can expect in the coming months as far as implementation of a timekeeping process, workday adjustments, and responsibility shifts.
Make sure that while explaining the changes it is clear that the business is also facing challenges with the new rules.
Leadership must be speaking the same language in the same tone in order to effectively get the message out to employees. For example, if there are new restrictions to the workday as far as time constraints, implement that across the board to show that everyone is going to be following the new system. People tend to be understanding of change when it effects a group of people. It is difficult for anyone who feels singled-out. Who knows, perhaps this can be used as an opportunity to help shift culture and create balance for employees? In the end, no change has to derail any company’s momentum, and with careful thought and purposeful intent, this new rule can be used for positive change in your organization.
As a business leader, ask yourself “What is the culture like in my company? And how can I use that to decide how to best approach my employees about these upcoming changes?”