{"id":245,"date":"2015-07-11T01:27:57","date_gmt":"2015-07-10T19:57:57","guid":{"rendered":"http:\/\/sishrsolutions.com\/why-dols-new-ot-rules-may-not-increase-pay\/"},"modified":"2015-07-11T01:27:57","modified_gmt":"2015-07-10T19:57:57","slug":"why-dols-new-ot-rules-may-not-increase-pay","status":"publish","type":"post","link":"https:\/\/sishrsolutions.com\/index.php\/hrmorning\/why-dols-new-ot-rules-may-not-increase-pay\/","title":{"rendered":"Why DOL\u2019s new OT rules may not increase pay"},"content":{"rendered":"<div id=\"dslc-theme-content\"><div id=\"dslc-theme-content-inner\"><div><p><a href=\"http:\/\/www.hrmorning.com\/dol-new-ot-rules-may-not-increase-pay\/\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/sishrsolutions.com\/wp-content\/uploads\/2015\/07\/158581178.jpg\" alt=\"overtime rules\" width=\"315\" height=\"211\"><\/a><\/p>\n<p>The DOL has said it expects its <strong><a href=\"http:\/\/www.hrmorning.com\/dol-issues-new-overtime-rules-what-you-need-to-do\/\" target=\"_blank\">new overtime exemption rule changes<\/a><\/strong> to make roughly 4.6 million workers eligible for OT, resulting in bigger paychecks. But is that really what&rsquo;s going to happen?&nbsp;<span><\/span><\/p>\n<p>Talk to just about anyone who&rsquo;s not in the Obama Administration, and the answer you&rsquo;ll get is &ldquo;no.&rdquo;<\/p>\n<p>While the rule changes, which President Obama <strong><a href=\"http:\/\/www.hrmorning.com\/when-can-we-expect-obamas-new-flsa-regulations\/\" target=\"_blank\">ordered the DOL<\/a><\/strong> to make, may sound good to members of the voting public who&rsquo;d like to make more for working above and beyond the standard 40-hour workweek, it&rsquo;s unlikely&nbsp;employers will take the changes lying down.<\/p>\n<p>Attorneys and consultants nationwide have been quick to point out that the vast majority of employers won&rsquo;t just&nbsp;hand over the $1.5 billion in extra wages the DOL estimated could be generated from the rule changes.<\/p>\n<p>Example: Tammy McCutchen, a former administrator for the DOL&rsquo;s Wage and Hour Division who was an architect of&nbsp;the last revisions to the FLSA&rsquo;s overtime rules back in 2004, while speaking at the 2015 SHRM annual conference in Las Vegas, said employers could adjust their pay strategies so their payroll costs don&rsquo;t increase.<\/p>\n<h2>Employer strategies<\/h2>\n<p>During her presentation, McCutchen, who&rsquo;s now an attorney for the law firm&nbsp;Littler Mendelson P.C., said there are three main strategies employers can use to deal with the new overtime rules:<\/p>\n<ul><li><strong>Shrinking salary to make room for OT.<\/strong> To do this, employers would project the amount of overtime salaried employees would be expected to work. Then the firms could shrink those employees&rsquo; salaries so that after the overtime is added in, the workers take-home pay would remain the same as it is today.<\/li>\n<li><strong>Reclassify staff.<\/strong> Under this scenario, employers would simply reclassify staff as non-exempt. From there, measures could be taken to track workers&rsquo; hours and prevent them from working OT if need be.<\/li>\n<li><strong>Increase workers&rsquo; wages.<\/strong> If they wish to avoid reclassifying workers altogether, employers could simply increase workers&rsquo; wages above the new $50,440 threshold and pay out any OT those employees work. Of course, when McCutchen asked how many HR pros in the audience planned on doing this zero hands shot up &mdash; so you can pretty much scratch this one from the list.<\/li>\n<\/ul><p>Another idea that has been tossed around, although not by McCutchen, is that employers may create policies prohibiting non-exempt employees from working overtime and then shifting work onto other employees.<\/p>\n<h2>No good scenarios &mdash; for employers or employees<\/h2>\n<p>With the odds being that the vast majority of employers will adopt one or a combination of these strategies, the rules&nbsp;&mdash; instead of generating more take-home pay for workers &mdash; may be&nbsp;creating&nbsp;a lose-lose scenario of sorts.<\/p>\n<p>How so? These strategies, while helping employees avoid rising payroll costs, actually threaten to shrink employees&rsquo; pay and make the company out to be the enemy.<\/p>\n<p>Example: Say you elect to shrink employees&rsquo; salaries to make room for their&nbsp;overtime hours, and you have a man who works 50 hours a week for a salary of $500. Now, you&rsquo;ll have to shrink his salary to closer to $350 with the hopes that 10 hours of overtime will get him up to the $500 mark. But there&rsquo;s a good chance not every week will be the same &mdash; and he may work 10 OT hours in some weeks and less in others. Under this scenario, the employee would end up taking home less money.<\/p>\n<p>But, and here&rsquo;s the kicker, he&rsquo;s not going to blame the DOL&rsquo;s new rules for his decrease in pay &mdash; he&rsquo;s going to blame you, his employer.<\/p>\n<p>Example #2: Let&rsquo;s say you go with&nbsp;a strategy in which you simply prohibit those currently under the $50,440 threshold from working OT &mdash; which you have the right to do (assuming you still pay them for any OT they happen to work). You still have to implement a mechanism for tracking their hours. This is bound to come as a shock to those who&rsquo;ve spend their entire careers not punching a clock &mdash; and they may not take kindly to it.<\/p>\n<p>Plus, suddenly, employees may feel as though their workweeks are becoming much more rigid. Reason:&nbsp;Someone once inclined to work a few less hours one week (perhaps to attend a child&rsquo;s event) only to make them up the next week may now feel as though anything other than 40-hour workweeks won&rsquo;t be tolerated. This, again, would put the employer in a tricky, and unenviable, spot.<\/p>\n<h2>Rules could hurt more than they help<\/h2>\n<p>Obviously, there&rsquo;s still a lot we don&rsquo;t know about the rules &mdash; like the changes to the &ldquo;duties tests&rdquo; &mdash; but if you believe employers are more inclined to adopt these cost-control strategies than allow more workers to start earning OT, then it appears the law could&nbsp;have the opposite of its intended effect.<\/p>\n<p>It could result in workers&rsquo; take-home pay shrinking &mdash; and working conditions becoming far more rigid. And that would create a whole new set of headaches for employers.<\/p>\n<span><\/span><\/div><p class=\"wpematico_credit\"><small>Powered by <a href=\"http:\/\/www.wpematico.com\" target=\"_blank\">WPeMatico<\/a><\/small><\/p><\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>The DOL has said it expects its new overtime exemption rule changes to make roughly 4.6 million workers eligible for OT, resulting in bigger paychecks. But is that really what&rsquo;s&nbsp;[&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":246,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-245","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hrmorning","clearfix"],"_links":{"self":[{"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/posts\/245","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/comments?post=245"}],"version-history":[{"count":0,"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/posts\/245\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/media\/246"}],"wp:attachment":[{"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/media?parent=245"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/categories?post=245"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sishrsolutions.com\/index.php\/wp-json\/wp\/v2\/tags?post=245"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}