The new FLSA Overtime Rule is causing quite a stir. This blog’s intent is not to lobby for or against any such rule, but more to help prepare you for its impact. If you wish a more in depth understanding of this ruling, here are three links that can help:
- The Final Rule from the Wage and Hour Division
- A report on the rule’s economic impact
- SHRM’s Stand on the new rule
Obviously, this new ruling will be a disrupter (to use the newest biz buzzword) to businesses of most every size and shape. If change or elimination of this law is a target for you and your business, it will take time. While raising the overtime threshold may be a good idea, doubling it is not and many businesses will face several burdensome backlashes because of it. In the meantime, business owners and CEOs must (stop me if you’ve heard this before) adapt to change and here are some you will be facing.
Low Morale: This new ruling, according to Roy Maurer with SHRM, will have an impact on positions. For example, those who are in line to finally reach a management position, will no doubt experience great disappointment when discovering there are no management positions available to accommodate their career aspirations and will remain as an hourly employee. Even those who are currently at a managerial level, will now be facing life back as an hourly employee. Neither of these options are morale boosters.
Teams: In addition, more competition for fewer open positions will cause conflict and chaos. People will feel they have been working hard to reach a higher position only to find that something they’ve worked so hard for goes to someone else. Therefore, team building will be a challenge.
Succession Planning: Since there are fewer positions available at every level, succession planning will be more difficult, complicated, and may leave your organization with large talent gaps.
Flexibility: Flexible working perks may suffer as it will be more difficult to track overtime and organizations may not be able to accommodate employees who both want or need it creating more low morale and a challenge for recruiting. Even H&R Block reports it will face challenges at tax time due to this new ruling.
Record Keeping: Record keeping will become more burdensome as now there will be more people with hourly designations and may even lead to increased payroll expenses.
As with any change, it is wise to form an overview committee to look at the big picture to:
- Be proactive in heading off these challenges
- Good planning will also help avoid making any knee jerk reactions or changes that are either unnecessary or that will come back to haunt you later.
- Planning how you can help employees avoid feeling they are being deprived of a goal for which they have been working toward, or worse yet, feeling a sense of demotion will be a monumental challenge, yet paramount to managing this change.
Pull out Kotter’s 8-Step process, or your favorite change model, to help you get your ducks in a row. Just reviewing the information, gets you nothing, putting these steps into action is key and monitoring them is essential.
Graphic Credit: BigStock.com Copyright: cartoon resource
Blasingame, J. (2016, October). New DOL Overtime Rules: One Good Outcome and Seven Bad Ones. Entrepreneurs
Maurer, R. (2016, May). DIL Overtime Rule Will Challenge Recruiting. Society for Human Resource Management
Society for Human Resource Management (SHRM). (2017). Video: SHRM Supports legislation to nullify new DOL #Overtime Regulations
Wage and Hour Davison. (2017, July). Final Rule: Overtime. United States Government
Wage and Hour Division. (n.d). Overtime Final Rule: Summary of the Economic Impact Study. United States Department of Labor