NAMPA — Starting Dec. 1, businesses could get in trouble for working certain salaried employees overtime without paying them.
“When I first heard this was coming out I thought, ‘Oh my God, how am I going to fix this?’” said Rich Cron, chief operating officer at Canyon County Habitat for Humanity.
Cron, a salaried employee who works at least 50 or 60 hours a week, will not be affected personally because he makes “just a little” over the U.S. Department of Labor’s newly adjusted limit of $47,476 for salaried employees who are not exempt from being paid overtime. However, he has one employee who will be affected, and he knows the other Habitat for Humanity affiliates in Idaho are in the same boat.
Cron attended the Nampa Chamber of Commerce’s panel discussion Wednesday at the Nampa Library to find out more about the change to overtime, which is expected to affect more than 4 million workers nationwide within the first year of implementation.
The overtime rule doesn’t actually change what overtime is, said panelist Stephen Cilley, CEO and founder of Ataraxis, which provides human resources, workers compensation, payroll and benefits services for businesses.
“Overtime” is still working more than 40 hours in a week and getting paid 1.5 times your hourly salary for every additional hour.
“This rule is really a change to the exempt levels, not necessarily overtime,” Cilley said. “It’s not changing overtime and how it’s calculated for people, they’re changing the level for the exempt individual.”
When people say “I’m salaried,” what they are really saying is they are exempt from overtime, Cilley said. As of Dec. 1, salaried individuals who make less than $913 per week, or $47,476 annually, are supposed to be paid overtime. This number will be adjusted every three years to keep the levels relevant to the economy.
The exempt rule already existed, Ataraxis’s founder added. The current exempt level for a salaried worker is $455 per week.
Employers have a number of options they can take to comply with the rule. They might track employees’ hours better to ensure they don’t go on overtime, or they might adjust other workers’ hours or hire more employees to lighten workloads.
In the case of Canyon County Habitat for Humanity’s one full-timer, Cron said they discussed the matter and decided to make him an hourly employee and pay him overtime. The employee likes to work, Cron said, and he does not intend to hire another part-timer to lighten the full-timer’s workload.
The overtime rule will affect companies whose employees do sales outside the office, too. If less than half of their time is spent in the office, that employee is subject to overtime rules.
Rhea Allen, president and CEO of Nampa-based Peppershock Media, said she is working to learn more about whether her employees count for overtime under the new rule. Her marketing, advertising, video production and design business takes her and her workers near and far, and the hours can add up.
“I’m just going to have to take the time to understand what it is and the risks I’m gaining,” Allen said.
Since her business is small, employees wear several hats. One of her workers does outside sales in addition to office work, so Allen needs to find out just how much to determine if she is eligible for overtime.
If the rule costs her more in employee compensation, she is going to have to either absorb the cost or raise her prices, which is difficult when one is trying to stay competitive to other businesses.
The overtime rule is expected to especially impact food service employees and entry-level managers, said Cilley, with Ataraxis.
Cilley added that while employers used to be able to get away with “comp time” or flat-out denying overtime pay, the federal government is going to be serious about making sure businesses comply with the law.
“Ten years ago, they wouldn’t have cared. Now they care,” Cilley said. “You just have to make a judgement call and decide if you’re willing to make the risk.”