The imposition of the proposed overtime rule will have an impact on human resources teams and their constituents. While some employees may be happy to finally qualify for overtime, that feeling may change if other policies are altered in an effort to balance the financial effects of the regulation. Overall workplace satisfaction may be reduced in the process.
A quick recap
The U.S. Department of Labor's adjustment would double the threshold for eligible overtime salaries. Currently, to be exempt from receiving additional pay, an employee must make $455 per week or less than $23,660 annually. The proposed adjustment would change those figures to $970 per week or less than $50, 440 per year. Hourly workers already qualify for overtime pay, but those employees deemed "professional, executive or administrative" by the duties test do not.
A divide in employee morale
The proposed alteration to the overtime rule has left companies, their HR teams and employees divided. As the new regulation could mean increased financial responsibilities, businesses are counting the DOL's proposition with a potential change to time off and benefits policies. Under the new rules, formerly exempt employees may now be reclassified, leaving companies to decide whether to continue to provide the same offerings to nonexempt workers. Formerly, many enterprises did not extend some benefits to nonexempt employees, including health coverage.
Employees are also separated in their opinions of the proposed overtime regulation. Some workers are looking forward to receiving additional compensation for their extra work. This could come as the result of two situations, according to CNN Money: Either an employee will begin to receive overtime pay due to the new regulation or the worker will receive a raise from his or her company in an effort to push that employee above the threshold and avoid paying overtime.
Other workers are less thrilled about the DOL's recommended changes, however. Not only will employees potentially face changes to their benefits if they are reclassified from exempt to nonexempt, but the adjustment also comes with different work restrictions and a potential loss of status, according to the Heritage Foundation. Overtime exemption can often be paired with the title of "professional" as compared to "working class."
Additionally, losing the exempt classification can result in the reduction of flexibility in the workplace. Hours may be tracked more closely to ensure employees don't go over the threshold, resulting in the feeling of being micromanaged. Employee morale may be seriously affected, leaving workers feeling less satisfied with their employer.
Next steps for HR
Before the proposed rule goes into effect, there are some steps HR teams can take. First, supervisors should complete an internal audit to understand the number of employees who will be affected by the regulation. Companies can then decide if they will adjust their benefits offerings for nonexempt workers in the case of reclassified employees.
Businesses should be sure to communicate the status of both federal adjustments and company-wide changes to ensure that workers are informed. Those employees whose hours may be more closely monitored may require some individual mentoring to figure out a plan to guarantee all responsibilities can be taken care of without exceeding the proposed overtime rule. The discussion should focus on what the company can do to help the employee meet his or her goals.
The DOL's proposed overtime rule will affect companies across the nation. While some employees may see the adjustment as a favorable change, others see it as a threat to autonomy and flexibility in the workplace. To maintain worker morale, businesses and their HR teams should take the necessary steps to ensure employees are aware of the changes, as well as how the company is approaching them.