Human Capital Management Blog

Strategies for HCM Professionals

3 tips to stay ahead of FLSA changes

overtime-rule-promoBy Casey Lewis, Product Marketing Manager, Ceridian

“Change is the law of life. And those who look only to the past or present are certain to miss the future.” – John F. Kennedy.

This quote is relevant in many walks of life, and is certainly applicable when talking about the Fair Labor Standards Act (FLSA). The FLSA contains complex regulations that present challenges and headaches for employers across the United States, which will increase with the upcoming changes to the legislation. The Department of Labor has revised the overtime exemption regulations of the FLSA by more than doubling the salary threshold for overtime eligibility from $23,660 to $47,476, and will continue to update the threshold every three years, undoubtedly influencing how organizations manage their workforces. The implications of this change in legislation could mean that millions of employees who were previously classified as exempt will be reclassified to non-exempt status, making them eligible to receive overtime pay.

Proactive vs. Reactive

In general, it is better to be proactive than reactive when it comes to change. With the coming changes to FLSA regulations, failing to prepare could result in costly compliance violations that are easily avoidable with the right technology and strategy in place. Here are some tips on staying ahead of and compliant with the impending changes to the FLSA.

Assess the Impact

Prior to making any decisions, it is important to understand how the changes to the FLSA will affect an organization. To start, determine which employees will be moving from ‘exempt’ to ‘non-exempt’ status by identifying any positions and any employees that make more than the current threshold of $23,660 but make less than the new threshold of $47,476. From here, a decision needs to be made on which employees will be reclassified as non-exempt, and which employees could alternatively have their salaries increased to remain exempt, by assessing what the cost of reclassifying positions would be compared to the cost of making salary adjustments. Should positions be reclassified, there are numerous items to take into consideration, including the number of hours employees work each week, job duties that can be redistributed or eliminated, and scheduling changes that can maximize workforce productivity.

Communicate the Change

When changes occur, it is essential to make sure that those affected have a clear understanding of what is changing, why it is changing, and how it impacts them. With regards to the imminent changes to FLSA regulations, both managers and employees need to be made aware. Communications to managers should focus on providing overtime rule compliance guides and tips on how to communicate the changes to their employees (particularly those who will have to start tracking their worked hours), while also offering training to managers on the best practices for effectively managing hourly employees. With regards to communicating these changes to employees, it is important to remember that people can often have emotional reactions to change. Because of this, communications to employees should stress that the changes are due to federal rules and regulations and not organizational policies, and emphasize the reclassification is not a demotion.

Reassess Workforce Strategy

The new FLSA rules only heighten the importance for organizations to be smart when it comes to scheduling employees, requiring many organizations to reassess their workforce strategy.  Often the ability to properly adapt to these changes is easier said than done, however, that is not necessarily the case. Organizations will need to generate the required data analytics, identifying employees and jobs within the defined salary thresholds, and help ensure accurate time tracking with cloud based time & attendance. Accuracy is important when it comes to tracking employee time information, as inaccurate overtime calculations can result in compliance violations. Organizations will need to build schedules according to labor demand forecasts, while closely monitoring real-time employee hours and adjust schedules to avoid overtime and be aware when overtime costs will be accrued.

Ultimately, it is best to face the impending FLSA changes head-on, and be as proactive as possible. If organizations can effectively assess the impacts of the changes, be clear in communicating the changes to all those it affects, and determine the best strategy for their workforce, they will be well-prepared for change. View our infographic Are You Ready for the New FLSA Overtime Rule? for even more details!

caseylewisheadshotCasey Lewis  is a Product Marketing Manager for Ceridian and a resident product and subject matter expert. Casey’s responsibilities include understanding, positioning and demonstrating the Dayforce HCM product to maximize the impact that it has on customers. Prior to joining Ceridian, Casey worked in finance at the Royal Bank of Canada. Casey is a graduate from Western University. Casey lives in Toronto and enjoys playing and watching sports, and travel.

Leave a Reply

Your email address will not be published. Required fields are marked *

Follow @Ceridian on twitter.