When it comes to regulating how people get paid, the federal government never runs out of ideas. Just a few months back, in May, they decided to once again make a change to overtime regulations. The U.S. Department of Labor waded into rulemaking regarding what constitutes a salaried employee or an employee paid by the hour.
With the changes set to go into effect this December, you can expect the rules of the game to make a dramatic change. So with the deadline looming, you probably want to know what you can expect. First, let’s take a look at what won’t be changing.
What Stays the Same
Though it may be a surprise to some, federal overtime laws have always mandated that employees must be doing specific types of work before they are made salary and exempt from overtime pay. For the most part, salaried duties would fall under managerial, administrative, executive or professional labor.
Though there are a number of jobs that fall under this category, generally speaking, a salaried employee must be someone who supervises two or more employees. Managers who are required to make their own judgments during the decision-making process would also fall under this category.
Finally, if an individual’s job requires an advanced degree or other highly technical educational requirement – say an engineer or an IT professional – they may be classified as salary. Conversely, if you are an office worker with the title of manager, you may not fall under the federal salary rules.
The new regulations will not change the requirement governing what is considered exempt work. As such, to be considered exempt from overtime, the employee must still do the covered work but also receive the new, enhanced salary number, which we will get into below.
Where trucking is concerned, the rules vary. If an employee is performing a certain function – such as a Safety Manager who may be responsible for designing and implementing a truck driver safety program – then the employer has the right to pay him under a salary scheme.
The New Pay Scheme
The new regulations will step in not where the duties are concerned, but where the pay is concerned. Up until the new rule in December, a salaried employee could be paid as little as $23,660 per year. After the new rule goes into effect, that amount will almost double, to $47,476 per year.
This essentially means that unless a person reaches the threshold of $47,476 per year, they must be paid as an hourly employee and receive 1.5 times his or her hourly rate when working over 40 hours in a standard work week.
The one caveat is that an employer can count bonuses and incentive programs in calculating up to 10 percent of the $47,476 – as long as those extras are paid on a quarterly basis. This stipulation only applies if the employee is actually paid up to the 10 percent mark, but not if they merely have the potential to be awarded the bonus or incentive.
How Trucking Could Be Affected
One example of how you might see these changes come about in the trucking sector is through how a dispatcher is paid. Let’s say you have a 10-year dispatcher making $45,000 a year and a newly-hired dispatcher making $37,550 a year.
For the higher ups, it might make sense to bump the senior dispatcher up to the mark required to make him or her a salaried employee, while keeping the new dispatcher under the hourly umbrella. That doesn’t mean this wouldn’t come without problems, especially where employee relations and administration are concerned.
Under this method, the senior employee would be doing the same job and amount of work, but will not be eligible for overtime, while the hourly employee would, but would have to keep time records. Still, the new rules may allow employers to better identify who is a misclassified employee.
Overall, the new rules will require extensive communication with employees to ensure everyone understands what the changes mean. Some flexibility will be required on everyone’s part in order for a fleet’s back office to effectively manage the change.