3 Tips for Transitioning to Overtime Compensation Compliance
Earlier this year, the Department of Labor revised their rules regarding overtime compensation. The changes have lowered the threshold for overtime eligibility and will go into effect on December 1st. Security companies must be compliant with these new regulations on that date.
While most are already prepared, those who have not can follow these three tips to ensure they don't find themselves afoul of the law.
Understanding Who Qualifies for Overtime
Duty requirements for FLSA exemptions have not changed. It still includes executives, administrative staff, and professionals. The new guidelines will change every three years and will be based on the minimum salary earned within the 40th percentile in the lowest-wage earning region of the United States. For high-earning professionals, the threshold is based on the 90th percentile nationally.
Tip #1 - Streamline Financial Management
Use technology to your advantage. Set up your systems so that you can access them via your computer, smart phone, tablet, etc. Most importantly, be sure to input the new thresholds into your systems. For employees, this means that any employee earning less than $913 per week, or $47,476 per year is eligible for overtime compensation.
Tip #2 - Cut Waste from the Budget
The changes to overtime compensation rules are going to have a significant impact on security providers. However, it does not necessarily mean that every provider will need to tighten their purse strings. Rather, it means that every security company must identify and trim the fat from the budget.
When trimming down your operations, look for areas where you can combine functions or streamline your processes. If you can combine tasks, or outsource responsibilities, this is the time to start doing that. However, be careful not to overload employees, or outsource mission critical tasks. Doing so can leave your business exposed and can diminish the quality and responsiveness of your services.
Tip #3 - Circle the Wagons with Accounting
Whether you do it in-house, or have a CPA on retainer, it's important that you meet with the team responsible for managing your company's money. This is a meeting you should be having at least once a month. When you meet with your accountant, be sure to ask them the details of the new rules and the way they are likely to impact your individual business. They should be able to crunch the numbers and determine whether or not you can reduce the amount of overtime you pay by hiring new employees, etc. Moreover, they can help you identify areas of your operations where you can trim other operational expenses as these new overtime changes go into effect.
Other Valuable Suggestions
You can adjust salaries to compensate for the changes. If you are an overtime-heavy business, then this may be the best way to approach the changes if you can't reduce the overtime expenses by hiring new personnel. Another option is to convert all workers to hourly rates. This can require some complex accounting, however, it can allow you to keep your costs under control without risking losing your employees.