Overtime Rule: It's time to comply

Overtime Summary
We had a record turnout this morning for our Overtime Law presentation by attorney Gregg Frame, part of our continuing series of Breakfast Briefings. With our co-sponsors from Pro Search, we believe that these informative gatherings are what make us different as providers of insurance and staffing services.

Overview
There are many aspects to the newly finalized rule governing overtime eligibility issued by the Wage and Hour Division of the U.S. Department of Labor. According to the DOL, approximately 4.2 million workers will be impacted by the law and in Maine, an estimated 16,000 additional people will now be eligible for overtime compensation.

Perhaps the most important message from Gregg Frame of Taylor McCormack & Frame was that employee compensation is going to be front and center among your entire workforce. Being in compliance with all your employees is your challenge legally, financially and culturally. He also counseled that employees losing the status of being exempt may be ersentful and, therefore, should be given special attention.

Another near-certainty is that under this rule, employees will bethoroughly examined and coached if they consult an attorneywith questions of compensation. It is the job of plaintiff's counsel to build a case covering the entirety of the employer-employee relationship. A small matter could blossom into a major event.

We  encourage you to conduct a thorough training of all employees regarding wage and hour rules. This rule may create a cultural shift in your workplace which means clear and frequent communication will benefit your organization and minimize conflicts.

Finally, we encourage you to be sure your Employment Practices Liability insurance includes an endorsement for legal defense costs for wage and hour claims. Be mindful that the endorsement does not cover settlement costs nor will it pay attorneys fees if it is determined that the employer intentionally violated the law.

Summary
The following are highlights of the rule.

• Effective December 1, 2016, all employees considered non-exempt who earn an annualized salary of $47,476 or less will be eligible for overtime compensation at time-and-a-half.
• Work exceeding 40 hours in a single week is subject to overtime. Employers may not average hours over a two-week pay period.
• Exempt employees are salaried but not all salaried employees are exempt. Work that is exempt can be broadly characterized as the employee exercising discretion and independent judgment with respect to matters of significance; supervision of two or more full-time equivalent employees with the power to hire and fire; work that is deemed to be predominantly intellectual such as teachers, lawyers and doctors.
• The overtime rule applies to "small business" as well as the largest employers.
• Outside sales personnel are exempted but must be awayfrom the office for the vast majority of their time and engaged in sales.
• Employees earning income from commissioned sales must have at least 1.5 times the minimum wage as a guarantee and half of their compensation made up of commissions from sales of goods and services. Only ten percent (10%) of non-discretionary bonuses and incentives, paid no less than quarterly, can be counted when determining if the employee's compensation exceeds the $47,476 threshold.
• Job descriptions, not job titles, are critical and must accurately reflect the duties of the employee. A thorough job description review for all positions is encouraged. You may want to engage an attorney and/or a human resources consulting firm to audit your and refine your current documentation and practices.
• Clearly written policies should include the use and restrictions associated with cell phones and remote computers as work over 40 hours is compensable.
• Review time keeping procedures and mechanisms.
• Seek legal clarification for travel, after-hours events, education, employee outings, etc.

If you need Employment Practices Liability coverage as well as protection for your entire business, we'd love to hear from you.