Understanding the DOL overtime rule Email
Tuesday, May 24, 2016 09:00 AM

DOL overtime ruleNo doubt that by now you’ve heard that last week the US Department of Labor (DOL) released a final rule regarding overtime for white collar workers. Despite some revisions from the rule change proposed last fall, the new rule might have a big impact on employers. Landscape company employers should review their current employees' status to determine whether they need to make changes in order to comply.

The final rule applies to overtime exemptions for executive, administrative, professional, outside sales and computer employees. The salary threshold for exemption is lower than previously proposed, but it is still more than twice the previous threshold. Employers may also use nondiscretionary bonuses and incentives (including commissions to satisfy up to 10% of the new salary level—provided those bonuses are paid quarterly or more often. In other words, year-end bonuses will not apply.

The rule does not affect employees who are currently non-exempt and eligible for overtime pay.

What do employers need to do in order to comply by the December 1, 2016 deadline?

Evaluate your current staff. Do you have exempt employees whose salary falls below the minimum standard? You’ll need to look at their workload and current hours worked, then choose how to adjust staff duties/times (and possibly those of related positions) to meet the new requirements.

Compile a list of various ways to comply with the new rule:

  • Increase employee salary to meet the new minimum salary level so that they may remain exempt
  • Reclassify affected employees as non-exempt and pay overtime
  • Reclassify affected employees as non-exempt and restrict overtime hours worked

Consider the implications of each method of compliance. Some possible questions are:

  • If that employee currently works overtime regularly, how can you insure the same amount of productivity without incurring greater costs (through overtime or increased salary)?
  • Can you shift responsibilities to insure that reclassified employees can complete their assigned duties within 40 hours?
  • Will you add new responsibilities to the job description of employees who earn an increased salary?

Communicate with your employees. We’ll explore this topic in-depth at another time. But it is crucial that you let your employees know about the new rule and understand why duties, payroll, and time-keeping methods may be changing.

DOL overtime rule webinarThe effective date of the final rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Nondiscretionary bonuses and incentive payments (including commissions) may satisfy up to 10% of the new salary level if paid quarterly or more frequently. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

Learn more about the DOL final rule on overtime at ALCC’s upcoming webinar with human resources consultant Ned Frazier.

ALCC will continue to review the overtime final rule and provide resources to help landscape companies comply. Coming soon to Colorado Green NOW: communicating with your employees about the rule and related changes in the workplace.

Read more in this issue:
Legislative update for Colorado landscape industry
Collaboration reaps rewards--The ELITE Award for Irrigation Management
Educate your customers about the new rain barrel law
OSHA final rule regarding silica dust exposure