Take the Ouch out of Overtime Pay
“Time, got the time tick-tick-tickin’ in my head, tickin’ in my head, tickin’ in my head …”
This isn’t just a killer song from British new wave artist Joe Jackson, circa 1979 – it might also be what some business owners, fleet managers and ops leaders are feeling right now about the new overtime regulations that are about to drop like they’re hot on Dec. 1.
For those of you who have been out to lunch, here’s the deal: On Dec. 1, 2016, the U.S. Department of Labor is changing the overtime exemption regulations. The minimum salary threshold qualification to be exempt from eligibility for OT pay goes up from $23,660 to $47,476 – or from $455 a week to $913 a week.
So if you have employees who are salaried and making somewhere between that $23k and $47k, they now will be covered under the Fair Labor Standards Act (FLSA) and can collect overtime for any hours they work over 40 per week. (Non-salaried/hourly employees who work over 40 hours have been and remain covered by the FLSA.)
The Department of Labor estimates that up to 4.2 million workers will become newly entitled to OT. We’re assuming you may have at least a few of these individuals working for you – perhaps as dispatcher or even as a salaried driver.
If so, the Department of Labor recommends a few solutions for a business:
1.Increase the salary of an employee to the new minimum threshold so he or she remains exempt.
2.Suck it up (our words, not theirs) and pay the OT, which is one and a half times the regular rate of pay.
3.Reduce or eliminate any OT – this might involve hiring additional staff, which incurs its own additional costs in the form of training, any benefits like health insurance, etc.
4.Reduce the amount of pay allocated to base salary (provided the employee still earns at least the applicable hourly minimum of $7.25) and add pay to account for OT for any hours over 40 in a given week, to hold total weekly pay constant.
5.Some combo of the above.
The various exemptions and tests are quite lengthy; if you haven’t done so already, it’s highly recommended that you check out the FAQs on the Department of Labor website, and if you’re unsure about what any of this means or whether things are changing for your business, seek legal counsel – better to be safe than sorry and incur fines.
And for those of you who know that your business is about to change – and even for those who don’t – do you have an actual way to track and manage OT, and know that timesheets are always right and OT numbers aren’t being fudged?
Incorrect timesheets and extra OT can put a serious hurtin’ on a business’s bottom line – and for any business looking to improve profits margins (who isn’t), and especially for any business that will be affected by these new overtime regs, field service management software has the capabilities to eliminate timesheet fraud and high overtime costs.
Because all employees and vehicles are tracked, fleet managers and ops leaders can run reports on info like actual hours a vehicle is in operation, daily actual start and finish times, hours and days worked, and average daily hours and weekly totals. This report is generated with a few clicks of the mouse – and because it can be used as an electronic timesheet, it removes the possibility of any funny business with hours.
You can help reduce OT and timesheet fraud when you rely on accurate, near real-time data, and immediately catch excessive OT – which means you’ll save on costs. They’ll be going up anyway for any business that is affected by the new FLSA rule – you don’t want to be taking an even bigger hit by paying OT that wasn’t earned.
New wave might be long out of style, but saving money never goes out of fashion – and extra cash in the bank is a guarantee when you use tracking software.
Copyright ©2016 Fleetmatics Development Limited. All rights reserved. Fleetmatics and the Fleetmatics logo are registered trademarks of Fleetmatics in the U.S. and other countries. Fleetmatics has used third party sources in the creation of this blog. Fleetmatics does not make any representations whatsoever, or give any warranties of any kind, expressed, implied or otherwise about the information contained in this blog. See https://www.fleetmatics.com/privacy-policy/126 for more details.
This post is not intended to provide legal advice on the new FLSA rule. Please consult a licensed professional attorney to obtain advice where appropriate.
And if payroll causes you more pain than you’d like to admit, check out our blog equipped with tips to stop the hurt.