Just this summer, the U.S. Department of Labor (DoL) changed the game when it came to overtime rules. The department moved to remove overtime restrictions on exempt employees making less than $50,440 annually and complicate the rules on salaried employees who are labeled exempt. As these changes become enacted in the next year, it just further highlights the difficulties for businesses looking to keep up with overtime pay laws and stay compliant.
So What are the Rules?
Employers have long bent the rules when it came to exempt employees which has created misunderstandings about exemptions and overtime. For example, in the U.S., exempt employees must be in a supervisory position and spend at least twenty percent of their time performing managerial duties, regardless of their actual title. While there are some professions, such as IT and sales, that may meet the exemption rule without managerial job duties, exempt employees are the exception to the rule, not the rule.
When it comes to overtime, the DoL is clear. Employees who work more than 40 hours a week and are not exempt employees must be compensated one and one-half times their pay rate. That's it. The DoL does not require additional pay on holidays or weekends unless those hours exceed those initial 40 hours. This gives employers the option of offering higher pay for shift work or holidays but doesn't require it.
In Canada, rules surrounding hours of work and overtime generally apply to all workers, but vary greatly from province to province. In most cases, overtime is paid at one and a half times the usual pay rate, much like in the United States. Some categories of workers may be excluded from employment standards legislation such as overtime pay, depending on their industry. For example, farm workers, home care givers, managers, oil field workers and some salespeople may be exempt from these rules.
Taking Local Laws Into Account
Many states and provinces have taken the federal overtime regulations and expanded them to benefit employees. So even if employers are in direct compliance with national regulations, they may not be in compliance with local laws. Speaking to a representative at your state or province’s labour office can address what additional laws need to be taken into account when scheduling.
The Importance of Being Compliant
It’s essential that your business, large or small, complies with all applicable overtime pay regulations. For example, during the 2012 fiscal year, the DoL recovered over $280 million in back wages for over 300,000 employees and the department has vowed to only increase its budget to fight compliance-related complaints. Employees can and have contacted the DoL with complaints that have cost businesses millions of dollars in back pay to make their shortage right. Even if certain activities, like unpaid overtime, have been the status quo for years, a single complaint and investigation can cost your company money and time.
Solutions for Adherence
Staying in compliance with labour laws requires education, open discussion, and technology. Businesses need to educate themselves on what the specific laws are and how they apply to each position in their company. Not having that base of education makes it difficult to correctly identify exempt employees and compensate overtime pay.
After education, businesses need to encourage a discussion about compensation disputes. While this may seem counter intuitive, having employees come to you first with questions about pay can prevent the involvement of local labour boards and possibly alert you to areas where laws are inadvertently being violated. New employees should be encouraged to speak to HR or their manager if they feel they are not being compensated according to regulations and management should take complaints seriously.
Finally, using technology to automate those regulations can help ensure that everyone from the mid-level supervisor to the CEO can follow regulations easily. A workforce management solution is a simple way to implement a system that monitors overtime, hours worked and allows employees to access that information easily. Integrating a workforce management software system into your workflow not only saves time when scheduling but prevents accidents from occurring when completing payroll.