By now you all have learned that a Texas federal judge passed a preliminary injunction to halt the overtime rule scheduled to become effective December 1. As much as I want to help you celebrate, I must instead remind you that this latest turn of events affects the salary threshold ONLY; if your salaried-exempt employees do not meet the duties tests, then your exposure still exists.
If you are unsure about what a “duties test” is, you are not alone. So much focus has been placed on the unreasonableness of increasing the minimum salary threshold from $23,660 per year to $47,476 per year (or changes to the highly-compensated threshold from $100k to $134,004k) that no one has been talking about the other very real (and less easy-to-understand) requirements: the duties tests.
Employees cannot (under existing or new regulations) be permitted to be exempt from overtime just because they work in an office, have a fancy title, handle the books or make some decisions regarding changes to estimates or pricing. The reality is that job titles have absolutely nothing to do with whether or not a person can be exempt from overtime and having authority to change pricing is not necessarily considered significant enough when determining a salaried classification.
While the duties-tests have been around for years, the duties definitions can be confusing (even the Department of Labor had to settle a $7m lawsuit in August for misclassifying their own employees). This is especially the case for employers who attempt to review job descriptions without the aid of an outside resource. Employers are more prone to forcing the duties tests to meet the exemption definitions rather than taking an objective view of whether the duties actually qualify for the exempt-status. This costly and potentially catastrophic situation occurs because employers have a hard time separating the potential overtime costs from the need to reclassify the employee.
I promise, whatever you spend for a consultant is much less than you would spend for the inevitable wage and hour lawsuits; unfortunately, I have seen the devastating reality of misclassification.
President-elect Trump will likely make some changes to the threshold requirements for small-businesses (which is typically defined as 50 or less belly-buttons), but having been in human resources for two decades I can tell you, changing the threshold will not fix the issue your organization may be facing and thanks to Obama’s new overtime initiative, your employees and their partners/spouses are much more educated as to what constitutes an exempt employee.
This injunction is temporary so I urge you to continue to educate yourself on the duties requirements so that you can reclassify your employees where necessary before it is too late.
To learn more, I would like to invite you to my highly educational seminar on December 13, 2016 at 8:00 a.m. – 11:00 a.m. at Memco (10876 Hillpoint Drive, San Antonio, TX 78217).
During this seminar you will receive valuable information about classification that extends beyond the threshold. You will learn:
- How to survive the new regulations without killing your budget
- How to communicate reclassification without begging employees to sue you for past misclassification mistakes
- How to review your employee classifications
- What changes you should make to your handbook
- Determine what changes will need to be communicated to the individuals you reclassify from salary to hourly status
- Clocking in and out requirements (and how to report time accurately to keep you out of the weeds)
- How to determine your exposure with 1099 subcontracted employees, travel pay requirements, training and education pay, and so much more
Please RSVP at email@example.com or via phone at 210.846.4900 by December 12, 2016 as seating is extremely limited. The cost is $45.00 and can be paid via check on the date of the seminar or via PayPal at firstname.lastname@example.org .