To pay or not to pay overtimeJulie Scheurerovertime pay, The Fair Labor Standards Act, the Society for Human Resource Management
Are you unsure if everyone who is entitled to overtime at your
company is receiving it? Join the crowd. Look up "confusing" in the
dictionary and you're likely to see "The Fair Labor Standards
Act," which is supposed to explain who is eligible for overtime
pay. Instead, its vague, outdated rules have left employers to fend
for themselves. And they aren't doing very well. Since 1997, the
number of FLSA class-action lawsuits has increased 229 percent,
according to the Society for Human
That's why the Department of
Labor has revised the rules for the first time since the Ford
administration. Will the revisions end the confusion? That's up for
The bad news is the new regulations may cost your company more
money. Employees making less than $23,600 a year will now be
guaranteed overtime, regardless of their job duties. The good news
is that you will now be able to deny overtime to most employees
making more than $100,000 annually.
But what about those making between $23,600 and $100,000 a year?
It depends on their job duties. If they are blue-collar workers or
first responders, such as firefighters, police officers and
emergency medical technicians, the new regulations require you to
pay them overtime.
Overtime can be denied to executive, administrative,
professional, computer or outside sales employees. The difficult
part is determining who falls into those categories. The revisions
are supposed to clarify which duties employees must perform in
order to be exempted from overtime.
The major changes include:
*No more short and long tests to assess employees' duties. Those
tests have now been condensed, so there is just one set of criteria
for each job classification.
*Employees no longer have to spend a certain percentage of time on
exempted duties to be denied overtime.
*Employees can only be considered executive if they are authorized
to hire, fire or recommend such changes in employment status. (And
no, Jill's off-handed comment that Jim should be fired because he's
a pig doesn't make her exempt from overtime. The recommendation
should carry some influence.)
*Learned professionals must now perform work that is "predominantly
intellectual in character," and "requiring the consistent exercise
of discretion and judgment." Confused? Well, the regulations won't
give you much help understanding the phrase "intellectual in
character." However, "exercise of discretion and judgment," a
confusing requirement also used in the test for administrative
employees, has finally been clarified. In general, someone
exercises discretion and judgment if they can compare and decide
between possible courses of action without a supervisor's immediate
To avoid hefty fines and possible lawsuits, you may want to
spend this summer figuring out who should be getting overtime in
accordance with the new rules. So much for working on your tan! But
you don't have to do it alone. The Society for Human Resource
Management recommends that companies, especially those without a
human resources manager, outsource this task. When it comes to
navigating the choppy waters of government regulations, you need
all the help you can get!
Julie Scheurer is a human resources communications
specialist for Patriot HR
Inc., a human resources outsourcing firm in Canton, Ohio. She
can be reached at (877) 968-7147, ext. 159 or e-mail email@example.com.