Landscape & Irrigation

38 July/August 2016 Landscape and Irrigation www.landscapeirrigation.com STAYING CURRENT ILLUSTRATION ABOVE ©ISTOCKPHOTO.COM/SMARTBOY10 ■ BY PAUL MENDELSOHN Preparing for fluctuations in overtime to meet your peak season can be a challenge, and now you have new rules to take into consideration. In late May, the U.S. Department of Labor (DOL) released its final rule changes to the Fair Labor Standards Act (FLSA) that increase the number of employees who are eligible for overtime by raising the threshold of "white collar" overtime exemption from $23,660 to $47,476, which equates to $913 each week. What this means is that you may be required to pay overtime to any employee paid below the $47,476 threshold if they exceed 40 hours of work in a week. Because of this, you should consider what these proposed rule changes mean when planning your labor costs and related compliance efforts. Here are some initial tips for mitigating the repercussions of these FLSA changes before they go into effect on December 1: CONDUCT A WORKFORCE AUDIT Take a look at your current salaried workforce, the jobs that they perform, and their current level of compensation. Start by classifying your employees by salary. Anyone making more than the threshold amount may be exempt from overtime if their job duties primarily involve executive, administrative or professional duties as defined under the regulations. Pay particular attention to anyone whose salary does not exceed the threshold, as these employees may be entitled to receive overtime now. This could greatly impact your salary budget. Also, when conducting the review, keep in mind that your state may enact regulations that differ from federal regulations. You'll need to follow whichever set of directives is more generous to the employee. KNOW YOUR EMPLOYEES' HOURS It's crucial to identify exactly how many hours per week each of your salaried employees works. For example, if a previously exempt employee made $26,000 annually under the old rules, and actually worked 40 hours per week, it might make sense to reclassify them to an hourly rate equal to their pay, or $12.50 per hour. You would then need to monitor that employee's work hours proactively with threshold reports and/or scheduling tools to manage overtime costs and to ensure that any work exceeding 40 hours per week is paid at the appropriate overtime rate. This is a great first step, but not all situations will be this straightforward. CONSIDER CHANGES TO SALARIES A different strategy may make sense for employees who make less than the proposed salary threshold, were previously exempt from overtime, and who typically work more than 40 hours per week. In this situation, you could consider raising employees' base salaries Preparing Your Business for Overtime Rule Compliance to at least the exemption threshold. To determine if this is a more cost-efficient approach, you will need to calculate the increased salary and compare it to the estimated overtime costs that would otherwise apply. Examine these averages across your whole workforce. For example, if the average employee works eight hours of overtime per week at an hourly overtime rate of about $24 per hour, the average overtime paid would be around $10,000 per year. So you could consider whether any employee with a base salary of at least $40,000 per year who works the average or more should have his or her base salary increased. You should also extend this analysis to anyone with a lower base salary but higher than average historical overtime. MONITOR OVERTIME When preparing for seasonal overtime or your business's busy season, you'll need to take a hard look at your budget. It might be prudent to consider whether hiring additional employees (full time, part time or temporary) would be a more cost-effective strategy. When making your decisions, it is important to keep in mind long-term goals and consider possible automation and technology possibilities as a way to control labor costs and monitor worker activity. For example, in its report "Productivity: Managing and Measuring a Workforce," the Aberdeen Group found that organizations using automated leave and absence management technology had 33 percent less unplanned overtime. Automation related to scheduling can be an important tool in managing overtime. Think of having an automatic summary of hours so you can see who is approaching the maximum number of hours, and select the best person for any open shift. PLAN NOW FOR FUTURE NEEDS You may find that some overtime is unavoidable. Take a realistic look at your processes and workforce to determine whether you'll need to plan to permit overtime in your busy season. If you can identify it early, based on past years, you'll be able to set aside funds in your budget for overtime to occur as planned. There obviously isn't a one-size-fits-all approach for landscape professionals to best respond to the proposed changes in FLSA overtime requirements. You may need to pick and choose from a variety of alternatives. In any event, to best prepare your business for compliance, and ensure that you have a good staffing plan moving forward, we recommend you take steps now. Paul Mendelsohn is VP of government relations at The National Association of Landscape Professionals. It's crucial to identify exactly how many hours per week each of your salaried employees works. LI

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