AAC F A M I L Y & F R I E N D S
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on the date requested unless doing so would “unduly disrupt” the operations of the agency. In locations with concurrent state wage laws, some states may not recognize or permit the applica- tion of some or all of the following exemptions.
HR Issues Resulting from New Salary Levels For a host of reasons ranging from job security to pensions, schedules and benefits, public-sector jobs traditionally pay less than comparable private-sector positions. Tis means that propor- tionally more county and municipal employees may be affected by the change in salary levels for the EAP exemption. Budget- ary restraints may curtail public employers’ ability to increase salaries to the level required for an employee to remain exempt. Consequently, there may be large numbers of employees whom county and municipal HR officers will need to reclassify from exempt to nonexempt. Te employer also will need to institute timekeeping procedures for reclassified employees, train them, change payroll practices and (where appropriate) implement pro- cedures for awarding and debiting compensatory time. Many salaried, managerial employees may perceive that their
conversion to hourly status is a “demotion,” and may object. Tere is more to salaried status than simply pay, and DOL’s changes will move up that first rung on the ladder of success for many workers — a lot. Te old exemption threshold ($455/ week) works out to about $9/hour over 50 hours, not an unusu- al rate for a starting-level assistant manager at a discount retail chain, for example. It’s certainly an improvement over a starting minimum hourly wage of $7.25. Learning to be a manager can take time, as the employee learns procedures and develops su- pervisory skills. When the starting point for a salaried manage- rial position is moved up to $921/week: that means an effective rate of $18.42 per hour over 50 hours. Te employer is making more than twice the investment in the employee. Most employ- ers are not going to be willing to give inexperienced first-timers an opportunity to move up from hourly work at annual rates in excess of $50,000. Te proposed salary level increase will raise other manage- ment issues as well. It will be necessary to maintain records of hours worked for more employees, and some with managerial responsibilities may chafe at being required to clock in and out. Tis may create an incentive to work more overtime. An employee earning $22.50 per hour will earn $33.75 per hour overtime: a 60-hour week will cost the employer $1,575. And overtime can be hard to control. For example, a nonexempt employee who checks his or her work e-mail outside of normal working hours may be due overtime for that activity. It is nearly impossible to prevent an employee possessing a smart phone from checking work e-mail without locking them out of the sys- tem after hours. Remember, an employer may adopt a rule pro- hibiting employees from working overtime, but it must pay if they work. When more high-earning employees are nonexempt, the stakes will rise for back pay awards (and attorneys’ fees). Te change also may affect employee eligibility for benefits such as
health insurance, since many employers provide more or better benefits to salaried, exempt workers than they do to nonexempt, hourly employees.
Perform and Audit, Plan Implementation When the new rules take effect, presumably in July 2016,
every employer (public and private sector) should conduct an audit covering the following steps: • First review payroll to identify current salaried employees. • Second, review that list and determine which salaried employees earn less than the new minimum salary level.
• Tird, study that list to determine whether a particular employee’s compensation should be increased to exceed the minimum, or whether the employee should be reclas- sified as hourly and eligible to earn overtime. If an em- ployee is “on the line,” it might make good business sense just to increase their pay. Do the math: analyze employ- ees’ prior year time and pay records to determine whether overall compensation (anticipated overtime included) will exceed the new minimum level. It may be less expensive in the long run to provide a substantial raise and retain the exemption than to reclassify and pay overtime.
•
If an employee needs to be reclassified, analyze prior year pay and hours to determine how to convert salary pay to hourly-plus-overtime pay on an equitable basis.
• Consider whether to pay the employee on a salaried, nonexempt basis; whether to use compensatory time; whether to pay time-and-a-half overtime; or whether to create a new position.
• Meet with employees affected by these changes to explain the steps being taken and answer questions.
ary an employee must be paid to qualify for the “white collar” exemption from overtime is unlikely to substantially raise the income of more first-level managers right away. It is more likely that this change will reinforce a perceived social chasm between hourly workers and salaried managers, and delay the promo- tion of hourly workers into managerial positions where they can grow professionally. Public- sector employers will have to review the status of all currently salaried employees to determine whether they still qualify, and make adjustments as needed to ensure compliance.
Larry Stine is a senior principal in the labor and employment law
firm of Wimberly, Lawson, Steckel, Schneider & Stine, PC in Atlanta. He is a former regional counsel to the U.S. Department of Labor. He specializes in OSHA, employment discrimination issues, OFCCP, and wage and hour matters. Providing clients with the information and guidance they need to avoid controversies is Mr. Stine’s first line of defense. Mr. Stine is co-author of a nationally recognized book entitled Wage and Hour Law: Compliance and Practice, which has been pub- lished since 1995.
www.arcounties.org COUNTY LINES, SPRING 2016 33
Conclusion Te proposed steep increase in the minimum amount of sal-
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