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not to record all of their time, especially if you are trying to limit them to forty hours a week. When employees are working off-the-clock, it never works out well for employers. Another trap we see when trying

to limit employees to just forty hours per week—penalizing employees for working unauthorized overtime. While the common sense approach might be to withhold payment for unauthorized work time, chances are your business did in fact benefit from the work. To avoid any claim that you violated the Fair Labor Standards Act by refusing to pay for overtime work, you should dis- cipline (such as verbal or written coun- seling) employees for any unauthorized work time, but pay them for the time worked. Another trap when making the

transition relates to home computers and smartphones. Previously exempt employees who could work and com- municate with you 24/7 are now on- the-clock. Anything other than a very minimal amount of time spent work- ing or communicating should now be compensated. These previously exempt employees may have the hardest time making the transition to recording their time. You will need to help them with that transition and stay on them about accurately recording their time. One “silver lining” to the upcom-

ing changes—perhaps now is a good time to transition those employees who might be “iffy” in terms of whether they are truly exempt to a non-exempt status. Thousands of previously sala- ried-exempt employees in Arkansas will see their positions turned into over- time-eligible positions, so making the change now gives you some cover.

HOW TO PREPARE Will there be bumps in the road for

a lot of employers making the transi- tion? Undoubtedly. But, you can pre- pare by doing the following:




1. You have until December 1. Have those employees who will be non- exempt start recording their time now by punching a time clock or keeping up with their hours worked on a day-to-day basis in some other reliable way. This helps in two ways —it gives you an idea of just how many hours a week they work, and it gets them in the habit of accurately recording their time. From there, you can do two things—either divide the employee’s current salary by forty (40) hours and pay an additional weekly amount for overtime, or con- vert an employee from salaried to hourly based on actual hours worked in a week, so that the cost is roughly the same. This will not be an exact science—there will undoubtedly be variations in the hours worked week- by-week—but it will get you close.

2. Start talking to your managers and employees now about the transition and why it’s happening. Although no one is being demoted and no job duties are being changed, some of your previously exempt employees will feel as if they have taken a step backwards. Help them ease into the new “reality” all businesses are facing.

3. Decide how you are going to handle after-hours communications/work —are you going to take away 24/7 access through computers and smart phones, or are you going to ensure that any work time is recorded and compensated?

4. Consider the use of the “fluctuating workweek” method of calculating overtime, which results in half-time overtime instead of time-and-a-half overtime. This method, however, is extremely complicated to administer.

5. Bite the bullet and increase the pay of those now-exempt employees making less than the new standard. Remember, up to 10 percent of the required salary under the new rule can be in the form of a non-discre- tionary bonus, incentive payment or commission.

6. Make sure you have a written policy warning employees about working off-the-clock and mandating that they accurately record their time. Talk to your managers about this as well—it never works out well for an employer when an employee works off-the-clock, especially if a manager knew about it.

Additionally, the Department of

Labor has provided a guidance docu- ment for private businesses. This transition will not be easy,

but at least you have about five months (instead of 30-60 days) to adjust to the Department of Labor’s new rules. Don’t wait until the last moment to start your transition.

Stuart Jackson and John Davis are part- ners on Wright Lindsey Jennings’ Labor & Employment Team. You may e-mail them at and jddavis@ You also may follow Wright Lindsey Jennings’ Labor & Employment Team on Twitter @WLJEmployment.

In addition to the salary level requirement, other factors help determine whether an exemption from the minimum wage and overtime requirements applies. In other words, just because you pay someone $913 a week does not automatically make that person an exempt employee.


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