November 17, 2016

Are You Ready for the New Overtime Law?

Note: Since we published this article on 11/17/16, the new overtime rule was blocked by a Texas judge on Tuesday, November 22. But that doesn't mean it's finished! According to the Los Angelos Times, the Labor Department is working to potentially appeal and move forward with the rule.

So . . .

If you have employees who are paid a salary, then you need to pay attention. In order to ensure every worker is compensated fairly for their hard work, the Labor Department is working to provide a "long-overdue pay raise for America's workers" by updating overtime regulations.

So what do you need to know about the law?

  • If a worker makes less than $47,476 annual salary, they’re entitled overtime if they work more than 40 hours a week. Affecting over 4 million workers.
  • You cannot average the hours over 2 weeks. So if the pay period is every two weeks, you can’t say, “Hey you worked 42 hours last week and 37 hours this week, therefore, you don’t qualify.” It’s PER week!
  • There is no limit on the employee’s age.
  • It does not require overtime for those who are working on Saturdays, Sundays, holidays or regular days of rest. The new regulations only come into play if employees are working overtime on those days.
  • It does not need to coincide with a calendar week. So if your pay period runs from Tuesday through Monday, the law would cover that timeframe.

The government provides 3 choices for employers

Raise Salaries, Pay Time-and-a-Half, Or Cut Hours

Now, if you’re starting to panic thinking about the decrease in morale if you cut hours or the potential increase in overhead, then you’re focusing on the wrong numbers.

The Better Solution: Lead Your Team to Higher Performance!

Be transparent with your team and rally together to perform at a higher level.

First, do the math. How many employees does this law affect? How many overtime hours do you have each week for salary employees? How much will it cost you to pay overtime or increase salaries? How will cutting hours affect your employees and your operations?

If cutting hours is a positive for all parties because your employees would rather have more free time than overtime hours. Great! You have a viable solution worth discussing and implementing.

But if cutting hours isn’t an option, then performing at a higher level to cover the increased overhead should be your aim.

What numbers should you focus on? Your KPIs and Payroll Percentage!

Payroll Percentage Formula

Determine your current payroll percentage and then figure out how much more production is needed to maintain that percentage when payroll costs increase. Next, set the needed benchmarks for your production KPIs in order to achieve that desired production. Discuss these benchmarks with your team to establish clear expectations. Then . . . this is the fun part . . . celebrate with your employees when production improves and everyone’s hard work pays off!!!

Ultimately, the new overtime rule provides an opportunity for your team and your business. How you lead your team through the new changes will determine whether or not you achieve a positive outcome. Following the steps outlined above will help you capitalize on the opportunity!

About the Author

darren-kaberna

Darren Kaberna is the founder & CEO of Accelerate My Practice, a dental coaching company that helps both the doctor(s) & team members achieve their dreams by teaching practical methods of behavior change that are applicable to both business & personal growth. Darren has a bachelor's degree in Biology & Chemistry, plus an MBA in Marketing & Finance. He has been working in the dental industry since 1997 in well over a thousand dental offices.

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