A few weeks ago, a friend commented on an article about the new overtime regulations that are going into effect on December 1, 2016. These regulations say that to be an exempt employee (not eligible for overtime), you will have to earn $47,476 per year ($913 per week), a huge jump from the current $23,000. She said that it was about time, and that she was tired of these horrible managers taking advantage of their employees.
Fast forward a few weeks, and this same friend who had praised the new regulations now starts complaining. Her boss is making her track her hours. She has to come in at a certain time and cannot clock in early or late. She can no longer run to a doctor's appointment during the day without either losing pay or deducting it from her PTO bank. She was upset. She just wants to be treated like a professional! What happened?
Well, turns out she is in this group of exempt employees who earn less than the new threshold. Come December 1, she can't legally be exempt, and so her employer is, rightfully, acting now. Here's how your life is going to change.
You may not have punched a clock, logged into a computer time tracking program, or filled out an Excel spreadsheet documenting your hours for years and years, but you're going to start soon. Every hour has to be tracked. You take an extra 30 minutes at lunch? Goes on the time card. You work on a spreadsheet at 10:00 pm? Has to go on the time card. if you don't, you're violating the law and putting your company at risk.
As my friend found out, when managers are forced to manage by the hours, they often do. There's no law that prohibits companies from offering flexibility to their non-exempt employees, but it's more difficult to track, so many won't allow it. While they can still evaluate your performance on your work product, your paycheck is based solely upon your hours. So, lots of bosses are going to make you stick to your scheduled hours. It's easier that way.
One study by George Mason University indicated that companies are very likely to cut telecommuting jobs under this new provision. Why? Because it's harder to verify your hours. The thing is, the law places the burden on the company, not the employee, so they have to be able to prove you worked the hours you said you did. That's harder to do if they can't see you.
Goodbye Unpaid Overtime.
This part seems awesome. Now you're eligible for overtime pay! Yay! Except it also means that if your company hasn't budgeted for your overtime, you have to go home. Which also sounds awesome. Except it's hard to do the above and beyond work when you're stuck at 40 hours per week. The area where this will hit the hardest is the non-profit sector which already runs on long hours and small salaries.
When it's absolutely critical to work more than 40 hours, managers will be forced to cut the hourly rate to allow for overtime payments and not go over budget. That means on weeks where work is low the paycheck may be well below what you'd receive as a salaried employee. The company isn't obligated to make that up to you either.
Is Every Employee Subject to This?
Almost everyone who previously qualified for exemption under the Fair Labor Standards Act who does not meet the new salary threshold will be made non-exempt. The exceptions? Teachers, doctors, and lawyers. Yep, the Department of Labor said teachers still don't get overtime, no matter how many hours they work. Only in Washington D.C. does the average starting salary for a teacher cross the threshold. Sorry, teachers.
So, if you earn less than $47,476 and are exempt, or you manage people who fall into this category, start preparing for the change now. You don't want to violate the law starting December 1.