By now you’ve undoubtedly heard about monumental changes to the Fair Labor Standards Act (FLSA) taking effect in December 2016, but the actual impact of those changes on your business and the potential consequences if the transition isn’t handled properly remain firmly on the horizon.
At the outset, there are a few options at your disposal to proactively address the changes and to maintain proper and compliant classification of employees without attracting the Department of Labor’s attention.
- Maintain overtime exemptions for salaried employees, but ensure that their salary is at least $47,476 per year;
- Convert employees to nonexempt status (hourly) and start paying them overtime; or
- Reclassify employees as nonexempt, but raise their hourly rate to a level that will satisfy the annual minimum salary.
For companies that have never dealt with unpaid overtime or classification before, the consequences of noncompliance can seem abstract. For instance, if you’ve got an employee who is newly eligible for overtime, how exactly do you go about calculating it? Are there state-specific regulations that you have to be aware of (hint: yes)?
The consequences of noncompliance are very real, however, demonstrated by the sheer volume of overtime and classification lawsuits currently on court dockets and in the news:
- FedEx recently agreed to settle a driver classification class action lawsuit to the tune of $240 million covering drivers in 20 states;
- Labor Ready will pay $4.5 million to settle a wage and hour lawsuit, but will also assume obligations to fix the issues that lead to unpaid wages in the first place;
- American Airlines (AA) has been sued for wage and hour violations and the lawsuit seeks to represent 5,000 AA clerks who work at over 50 airports around the country;
- Nestle has been sued in California for allegedly failing to provide adequate rest and meal breaks to employees; and
- World-renowned Bada Bing! strip club (made famous by HBO’s “The Sopranos”) has been sued for allegedly failing to pay dancers minimum wage and withholding their earned gratuities.
Ultimately, if you’re in HR, uncertainty is your enemy. Not only does it make it harder to do your job, but it begets questions that you may not be able to answer.
Will I be reclassified? What will my new compensation look like? Is the company going to lay off employees because of this? How will this affect our bottom line?
The truth is that nobody knows the answers to these questions yet (and even if they did, they probably wouldn’t disseminate them), but the longer you go without preparing and estimating, the harder it will be to wrap your head around the implications and ultimately, comply with the new overtime rules. Make an effort to estimate new salaries and compensation under the rules and start laying the groundwork for the transition now, so it’s not a shock to your employees and to your company’s bottom line when the regulations change in December.
Dedication to Integration
Cable giant Altice has acquired fellow cable giant Cablevision for the paltry sum of $17.7 billion. Altice plans $900 million worth of cost cuts to the Cablevision business in the first three years after the deal is finalized, which it plans to accomplish with a combination of terminations, reductions in compensation and the forced exodus of “well-paid” Cablevision executives. Be on the lookout for dozens of golden parachutes.
Microsoft has a strategy for integrating its newest acquisition, LinkedIn, but it’s a departure from previous strategies around acquisitions like Yammer, Sharepoint and Skype, which were integrated into the Microsoft corporate offerings. LinkedIn will get the “hands-off” approach to integration, on the other hand, with the goal of giving LinkedIn’s culture and brand room to breathe and to flourish. Too bad they can’t go back and do the same for Skype.
Our nation’s birthday is almost upon us and you know what that means… July 1st compliance alerts! Oh, did you think I was going for barbecues and fireworks? Honest mistake, there. Anyway, did you know that about three dozen wage and hour, leave and payroll statutes will change or take effect around the country on July 1st? You do now.
Meanwhile, the Supreme Court has let stand a ruling that essentially upheld the Obama Administration’s rule requiring home healthcare workers to be paid overtime. Under the rule, third-party employers must pay overtime if domestic service employees are hired to provide companionship services to elderly or disabled individuals who are unable to care for themselves.
In Silicon Valley, 30 tech companies have taken the “Tech Inclusion Pledge,” which aims to make workforces in the tech industry more representative of US demographics. Signees include Airbnb, GitHub, Intel, Lyft, Pinterest and Spotify. Apple, Facebook and Google have all previously released data on workforce diversity, though women and minorities remain underrepresented in those companies.
HR Grab Bag
As per the “Evil HR Lady,” one of my favorite HR bloggers, the “Feedback Sandwich” should be killed. If you’re unfamiliar with this theory on criticism, it goes that you should sandwich your (hopefully constructive) criticism in between elements of praise.
Hey Steve, you did great work on that project last week! By the way, you really need to start coming in on time because people are starting to complain. Oh and hey, nice tie!
The praise on both sides is the “bread” with the criticism itself comprising the bulk of the “meal.” Anecdotally, I can tell you that the “Feedback Sandwich” does work on little leaguers, but in the modern workplace? Not so much.
As the Evil HR Lady says (I should start all sentences this way), this practice is silly and it serves to undermine the veracity of the criticism itself. By sandwiching criticism between what is essentially forced praise, you’re telling your employees that praising them is not nearly as important to you as criticizing them. Genuine criticism or praise should be delivered genuinely and when the timing is appropriate, not when it serves to soften the blow of deserved criticism.
How is this song related to HR?
In the last edition of HR Intel, we asked you how women’s lib anthem “Survivor” by Destiny’s Child is relevant to HR. We sort of tipped our hand on this one as the song is all about women, their place in modern society, their plight in trying to achieve true equality and ultimately, their fighting spirit. Despite tremendous strides toward equality and even on the cusp of potentially the first female President and perhaps even an all-female Presidential ticket, true equality remains elusive. Look no further than the aforementioned Silicon Valley, where the titans of tech are tripping over themselves to ensure that their companies employ enough women. We still have a ways to go.
We leave you with “Touch of Grey” by the Grateful Dead.
Tell us how you think this song is related to HR in the comments section below.