Time and attendance software may provide the tools needed to help companies conform to the Department of Labor's new overtime rules. Under the Fair Labor Standards Act, certain professionals are exempt from overtime when they work more than 40 hours per week; everyone else must be paid overtime wages equal to one-and-one-half times their base pay. The final rules take effect in December 2016, yet Paychex research reveals that one-in-five small business owners claim to be unaware of the regulations. Here's a closer look at what business owners need to know.
Understanding the FLSA updates
The DOL changes raised the FLSA threshold for exempt status from $23,660 per year ($455 per week) to $47,476 per year ($913 per week) for the executive, administrative, and professional (white collar) exemptions. In addition, salaries will be updated and reviewed every three years. The changes raised the "highly compensated employee" (HCE) annual salary threshold from $100,000 to $134,004 and allow bonuses and incentive payments to count toward up to 10 percent of the new salary level. The changing regulations may make millions of US employees (who were previously exempt) eligible for overtime.
The right tools to track employee time
Once companies have evaluated whether their employees have been impacted and how to deal accordingly, the right tools are essential to staying in compliance. Time and attendance software makes it easy for employees to submit accurate time quickly; managers and HR leaders can monitor time to ensure they're staying in compliance with the new regulations.
- Track the hours your employees work: One of the most important features of time and attendance software is capturing and recording the hours that your team works. Today's time and attendance software offers up-to-the-minute visualizations of employee time. With the prevalence of remote workers and different work environments, it's possible to record time with a smart phone app, biometric clocks, touch-screen HID, tablet kiosk software, and web and mobile punch applications. Companies can configure unique employee reporting setups that support their team and are customized to their companies' most important needs.
- Verify accurate pay. When you prepare your timesheets manually, human error comes into play – especially when you're transitioning to a new way of doing things. However, with time and attendance software, it's possible to quickly verify accurate pay and avoid errors. Accurate pay is an essential part of complying with the new overtime regulations. Managers and employees can review, edit, and update time cards at any time.
- Control Costs. Focusing on awareness and education is the first step toward controlling costs under the new regulations. Managers, supervisors, and anyone in charge of scheduling need to understand the new regulations and their impact on the bottom line. Employees should also be advised of any intended maximums on employee hours and what process will be in place for granting exceptions. Companies can also use automated alerts to know when certain employees are reaching the threshold, for example, to control costs and plan for overtime spending.
- Visibility and Reporting: Compliance with new regulations requires knowledge, visibility, and access to data. Time and attendance solutions allow managers to have access to dashboards that let them see the big picture at a glance. With just a few clicks, it's possible to have full visibility into current schedules and generate reports that provide insights into long-term trends.
The Department of Labor's new overtime regulations will impact many businesses. By planning ahead and investing in the right tools, it's possible to ensure that you're complying with the new changes – while also strategizing around what employment planning approaches are best for your business.