Uncertainty over coming revisions to federal overtime pay regulations is no excuse for delaying to prepare for changes that could profoundly affect how workers view their jobs.
Even when there's warning, shifts in employment regulations can be unnerving. Coming adjustments to federal rules that govern overtime pay are no exception.
The proposed changes seek to increase the cap for overtime pay for full time, salaried workers and to do away with OT exemptions for managers and supervisors.
As if these major pay structure changes weren't daunting enough, uncertainties surrounding the rule are putting pressure on hospitals and health systems as they put the finishing touches on their 2016 plans and budgets over the next few weeks. But with the Department of Labor (DOL) still mum on the final version of the new regs, healthcare execs will be flying blind.
New Overtime Regulations Coming in 2016
Public comments are now closed, but the DOL has received "thousands" of comments about the new regulations, says Alicia Koepke, an attorney at Trenam Law in Tampa, Florida.
Alicia Koepke |
"There were objections on both sides," Koepke says. Some were about the amount of the increased cap. Some commenters requested a delay in the implementation of the regulations. [DOL has indicated that it will release the final version of the new regulations in 2016, but has not said when.] The agency is still reviewing all comments, says Koepke.
She expects that the new regulations will become law by the middle of 2016, and says now is the time for employers to prepare. Koepke offers five recommendations:
1. Involve a Lawyer
The revisions to the regulation will be complicated and specific, and the financial stakes are high, so legal counsel should be involved. No one should try to guess at how changes in the regulations will affect salaries, impact labor relations, or whether employers' policy changes put place as a result are legal.
"[HR leaders] should certainly speak with a lawyer… They have the benefit of open, frank, and privileged communications to make sure [clients are] following all the legal obligations," says Koepke.
2. Think Before You Act
What changes to personnel will your organization have to make in order to offset costs associated with the new regulations? Some may hire more part-time employees to minimize having to pay overtime. Others may decide to make some hourly employees salaried, while others might do the opposite.
Before changing titles and duties, cutting hours, or drafting layoff plans, review employees and their individual situations. It's possible that not everyone under the 40% threshold is actually non-exempt, even under the new regulations.
"For a hospital, I don't think you are going to have many [employees]… that fall into that category, but they might have a couple," Koepke says. She suggests waiting until all the facts have been gathered before deciding which steps to take next.
3. Review HR Materials
"Companies already have in place job descriptions, hiring letters, employment manuals, and benefit plans that may refer to a salary for these employees. If they're going to reclassify these employees as non-exempt… they're going to have to take a look at these [documents] and decide what needs to be changed," says Koepke.
Many organizations' HR-related forms and materials will probably refer to a soon-to-be outdated compensation structure or policies that no longer fit. Review the materials and be ready to edit them to comply with the final regulations once they're released.
4. Train Employees on Time Tracking
Employees who are switched from salaried to non-salaried status may need a refresher on how to properly track their time. If your organization is using time-tracking software, ensure that everyone is properly trained before the new regulations go into effect.
How New Overtime Regs Will Impact Hospital Workers
The same goes for the payroll department. Just as workers might not know how to track time, payroll processors might need a refresher as well. Be sure they are using the right rates, that all exemptions are accounted for, and that they demonstrate proficiency on any new timekeeping or payroll programs or tools.
5. Communicate Carefully
Get ready for some difficult conversations. Depending on the changes to be made, expect a wide range of employee reactions. Some employees will be delighted to learn they will be able to earn more money for overtime work; others may be infuriated to have to "punch in" when they arrive at work.
An even bigger challenge is communicating the change in status from full-time to part-time, or from salaried to hourly. "There is a psychological aspect to telling someone who was previously salaried that they are now hourly," says Koepke.
But, she says, "The employer can explain that this change was done to comply with new legal requirements, and it is not a reflection of the employee's importance to the organization."
It's important to develop a clear message for employees and to apply it consistently among all employees. When explaining employee status changes to employees, come prepared for questions, concerns, and possibly some angry reactions from workers.
These legal changes are confusing to everyone, so it's important to begin planning for them now. Don't wait until the last minute to hastily make policy changes that could profoundly affect how workers view their jobs and their pay.
Lena J. Weiner is an associate editor at HealthLeaders Media.