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Don't Fear the Overtime Rule Changes

The recent announcement by the Department of Labor regarding coming changes to overtime regulations are shocking to many eyes, including mine. An increase in the exempt threshold is a needed adjustment in a wage-imbalanced market, especially since the last time the threshold was established was 2004, at $455 per week on the Federal level. I could barely contain my surprise, though, when I saw the limit would more than double to $970 per week.

This is going to be a significant lift, especially for small businesses, and many will throw up their hands in frustration at the seismic change this will be. The fear is misplaced, however, and I encourage anyone reading this to take a deep breath and consider the following.

1. Analyze your current staffing levels

Figure out who exactly will be affected by this change and take a look at their actual hours worked. Yes, you should be tracking your exempt employees' hours, too. How else will you measure productivity and staffing efficiency? But that's another topic for another time.

For those employees who will suddenly be non-exempt, make some decisions. How close are they to the limit? Perhaps a bump in salary will be cost effective. Get those people off the list.

2. Who is doing the heavy lifting?

Next, look at how many of these employees are regularly working overtime - is it just a few hours? A boatload? Now that the recession has lifted, many companies are deciding to rehire for long-vacant roles, and perhaps you should finally break down and add one more to your headcount. It may be more cost effective to have an extra person at straight pay than covering that productivity gap with time and a half.

3. Tighten your policies

If you don't have an overtime policy in place yet, now is an excellent time. Establish procedures that set work hours and require prior approval for extra hours. You will still need to pay unapproved hours worked, but with a strong policy you can let your progressive discipline process take over and weed out abuse. Train your employees on the policy and make sure your managers are keeping an eye on the time clock.

4. Speaking of the time clock...

Keeping accurate time records is critical for businesses, for many reasons, both from a compliance and strategic perspective. The technology in this space is very advanced, and the money you'll save in implementing the system will help defray the costs. There is no better time to ditch paper processes and utilize new time clocks that cut down on waste and false-punching.

5. Reaping the rewards

This new requirement can end up being a boon for your business. If you've never really thought about how much time your employees are putting in, and what you're getting for those hours, you have a missed, but golden, opportunity to take charge of this and create huge gains in your operations.

These regulations could still face significant changes or not pass at all, but considering the benefits, there is little downside to undertaking this analysis regardless.

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