FLSA Overtime Regulations

The Fair Labor Standards Act (FLSA) was initially crafted in 1938, and since then, this act and the Department of Labor (DOL) regulations have governed overtime provisions in the U.S.

On April 23, 2024, the DOL released a final ruling that updated FLSA earnings for overtime-exempt employees. The update changed the minimum pay an exempt employee must be paid.

Now, overtime-exempt workers must be paid at least $58,656 annually to stay exempt. This update gives companies a chance to review their current overtime policies. 

Critical Elements of an Overtime Policy

As you come up with your overtime policy, you need to think about some of the following elements:

Determine Exempt Classifications

When determining which employees qualify for an overtime exemption, it is crucial to carefully evaluate their job duties. Generally, executive, outside sales, computer, professional, and administrative workers are considered exempt from overtime pay.

However, we recommend you refer to the Department of Labor's detailed guidelines on job duties for each specific exemption category to ensure accurate classification. By thoroughly analyzing the responsibilities and tasks performed by each employee, businesses can effectively determine their eligibility for overtime exemption under the Fair Labor Standards Act (FLSA).

Ensure You Pay Exempt Employees The Right Amount

The updated FLSA salary minimum was put in place to prevent businesses from wrongly categorizing lower-level managers as exempt to evade paying overtime. However, there is a risk that some companies might now misclassify exempt employees as non-exempt hourly workers in an attempt to cut costs. Misclassifying employees solely to circumvent the minimum salary requirement could result in penalties from the Department of Labor (DOL).

Input Your New Overtime Guidelines in Your Employee Handbook

Having a well-defined overtime policy is crucial for ensuring that employees do not take advantage of overtime privileges, while also guaranteeing they are fairly compensated for their extra hours of work. Not only does a comprehensive overtime policy promote fairness and transparency within the organization, but it also serves as a key component in maintaining compliance with legal requirements set forth by the Fair Labor Standards Act (FLSA).

By including your overtime policy in the employee handbook, you provide a clear and accessible guide for all employees to reference. This proactive approach helps to set expectations and guidelines for overtime practices within the company, ultimately promoting a culture of accountability and efficiency.

Moreover, integrating the overtime policy into the employee handbook streamlines communication and ensures that all staff members are aware of the rules and regulations surrounding overtime work. This proactive measure can help prevent misunderstandings or disputes regarding overtime pay, fostering a harmonious work environment where employees feel valued and respected for their time and effort.

Incorporating the overtime policy into the employee handbook also demonstrates the company's commitment to upholding labor laws and standards, showcasing a dedication to ethical business practices and employee well-being. By making the policy easily accessible to all employees, you empower them to adhere to the guidelines and contribute to a more productive and compliant workplace overall.

Review The Overtime Policy With Employees

Your overtime policy cannot be effective if your employees do not understand it. Ensure everyone at your business reads through the updated overtime policy.

Integrating your overtime guidelines into the employee onboarding process is crucial for ensuring that new hires are aware of the company's policies from the start. By including this information in the onboarding materials, employees can familiarize themselves with the expectations surrounding overtime work and understand their rights and responsibilities.

Additionally, posting the FLSA's minimum wage poster in the workplace serves as a visual reminder of the regulations that govern overtime pay. This poster not only informs employees of their rights but also demonstrates the company's commitment to compliance with labor laws. By making this information visible to all staff members, you create a transparent and supportive work environment where everyone is aware of their entitlements and obligations when it comes to overtime.

Be Strict About The Clocking In Process

As companies adjust to the new FLSA minimum salary requirements, some may opt to transition salaried employees to hourly pay. In such cases, it becomes imperative to carefully review and update time-tracking policies for hourly employees. Unlike salaried workers who may have been accustomed to flexibly managing their time by arriving early or staying late without tracking their hours, hourly employees must now adhere to strict clock-in and clock-out procedures to ensure accurate recording of their work hours.

This shift in tracking is important to prevent any instances of uncompensated overtime, as hourly employees are entitled to receive payment for all hours worked beyond their designated shifts.

By emphasizing the importance of accurate timekeeping practices, companies can effectively mitigate the risk of potential overtime violations and ensure compliance with the updated FLSA regulations.

Train Managers on Phone, Email and Media Usage

Managers play a critical role in ensuring compliance with overtime regulations, especially when it comes to communication with hourly workers outside of their scheduled shifts. While salaried employees may be accustomed to responding to work-related messages after hours, reaching out to hourly staff during their off-time can lead to unintended overtime issues. It is essential for managers to receive proper training on the company's policies regarding communication with hourly employees outside of their designated work hours.

By providing managers with clear guidelines and expectations concerning after-hours communication with hourly workers, businesses can prevent potential overtime violations and ensure that employees are compensated fairly for any additional work performed outside of their regular shifts. This training not only helps managers understand the importance of respecting employees' off-time but also reinforces the company's commitment to upholding labor laws and promoting a healthy work-life balance for all staff members.

Train Your Human Resource Department on Exempt Classifications

To further reinforce the importance of compliance with FLSA overtime regulations, we recommend you provide ongoing training for your Human Resources department. By incorporating comprehensive overtime guidance into HR training programs, you equip your HR team with the knowledge and skills needed to effectively prevent overtime violations within the organization.

Your HR team should stay updated on any new developments or changes in overtime regulations. Staying informed about the latest updates in this area will enable Human Resource teams to adapt quickly and make necessary adjustments to policies and procedures to ensure continued compliance with FLSA guidelines.

By investing in the training and development of your HR department, you not only strengthen your business' commitment to upholding labor laws, but it also create a culture of accountability and transparency when it comes to overtime practices.

Empowering your HR team with the tools and resources they need to navigate FLSA overtime regulations effectively will ultimately contribute to a more compliant and efficient workplace environment.

How Timekeeping Software Can Help Ensure You Are Committing To Your Overtime Policy

Timekeeping software can help ensure your company stays committed to your overtime policy by:

• Overtime Alerts: The software provides overtime safeguard alerts that notify employers and supervisors when employees are approaching overtime limits, allowing for proactive management of overtime hours.
• Schedule Enforcement: The system can prevent employees from punching in/out outside of their scheduled shifts, reducing the risk of unauthorized overtime.
• Compliance Alerts and Reminders: Features like break reminders and overtime safeguard alerts help ensure compliance with labor laws and company policies related to overtime.
• Accrual Tracking: The software tracks state-required hourly accruals, sick leave, and other time-off accruals, providing real-time visibility into overtime eligibility and balances.
• Reporting: Detailed reports on clock-ins, hour accruals, and overtime allow for monitoring and auditing. 
• Integrated System: Since the timekeeping system can be connected with payroll and HR, overtime hours are seamlessly transferred for accurate overtime pay calculations and compliance.

Let Us Help You Navigate FLSA Overtime Regulations

Following the updated FLSA overtime regulations, companies must carefully review their overtime policies and employee classifications to ensure compliance and avoid penalties.

Leveraging timekeeping software with features like overtime alerts, schedule enforcement, accrual tracking, and reporting can help.

Contact Megapay today to learn how our system can work for your business to help you stay compliant!