How Will You Adapt: Changes in Paid Overtime

Over the past year, the US Department of Labor has been revising the Fair Labor Standards Act (FLSA), which governs which positions must be paid overtime. Your payroll firm and employment attorney have probably been pushing you to review your practices. The proposed rules got a lot of comments, over a quarter million, and now the new rules believed to be coming out this month with a short implementation period. Rumor has it that the salary level test will be $47,000 instead of the originally proposed $50,440.

Many small organizations had ignored the duties tests of the FLSA and called all employees exempt from the FLSA based on the old test of $23,660. In reality, exemption from FLSA is based on the duties of the position and the salary test.

What Should You Do Now?

1. Look at your existing position descriptions and requirements.

Are they accurate and current? If not, update them. Look at the duties test first and determine if the positions are in fact exempt from the law. A simple checklist:

2. Review the pay of individuals in each position you consider exempt from FLSA using the duties test.

Assess what you will do with each if their current salary is less than the final salary test. In some cases, it may make sense to raise pay. In others, it may make more sense to reclassify the position as non-exempt and control overtime.

3. Consider your culture.

If you have been paying all employees on a salary basis, you may wish to continue to do so. This can be done whether employees are exempt or non-exempt. If your organization pays at the end of a specific pay period through the same date, and you wish to include non-exempt […]

By |May 9th, 2016|Business planning, Compensation|Comments Off on How Will You Adapt: Changes in Paid Overtime

Compensation Tips

Now is the time many organizations start thinking about the next year’s pay raises. Before you start the hunt for ‘market rates’, projected pay raise averages (overall 3.1% for 2105), budget or other data – think a bit about what you are paying for.

Very few founders, CEOs, or senior executives have thought about their philosophy of compensation directly. Fewer still have tied it to their desired culture.  And so, over the decades, I have talked about these issues with many senior folks.

Often I also use a short quiz and set up scenarios like this:

You have two people in the same role, both are equally productive.

And I ask a series of questions about how one would calculate the pay raise for each. One question is: John comes in early and stays late every day, he works many long hours each week. Tom works his regular schedule but rarely puts in extra time unless helping others.

And nearly 3/4 say that they would give John a larger raise.

Do you see the issue? Most do not until I ask why they are rewarding the person who cannot get their work done in a timely manner over the one who does. Remember – the conditions were that both were equally productive. So Tom is doing the same amount and quality of work in less time than John.

As you think about your salary planning for next year, here are some questions to ask yourself. Pick the top three in each and rank order those.

1. Do we want to compensate for:

individual productivity
cost of living changes
our financial success
increased productivity
market pricing changes
clients increase
revenue growth (funding growth for non-profits)

Think, for example, how many organizations say that they value teamwork highly. How many actually base […]