New Overtime Rule: 5 Steps for Tribes to Get Ready

The Department of Labor has finalized a rule that raises the salary threshold at which eligible workers qualify for overtime from $23,660 to $47,476 a year. Set to become effective on Dec. 1, 2016, the new threshold also will automatically increase every three years based on wage growth over time.

With plenty of time to prepare, Tribes should consider these five steps to be ready for the added salary expense:

  1. Calculate potential costs
    Analyze any new economic development projects and existing budgets that will be affected by the added salary expense. Tribes with matching retirement plans must also consider the added amount you’ll be contributing annually for higher salary employees.
  2. Analyze affected positions
    After identifying positions that may be subject to the salary threshold increase, Tribes should consider how these employees are supported (i.e., federal grants) and how operations will be affected by reclassifying non-exempt status and/or salary increases. It may be necessary to convert affected positions to non-exempt, raise the salary level or begin new timekeeping rules.
  3. Start tracking work hours
    For employees who were previously exempt from overtime pay, employers should start keeping track of work hours to predict how much overtime they’ll have to pay starting in December.
  4. Consider offering comp time
    Tribal governments have the option to provide comp time instead of cash payments for overtime hours. Comp time, which is paid at the regular pay rate, may save salary expenses. The comp time must be provided at 1.5 hours for each overtime hour worked.
  5. Invest in timekeeping systems
    Tribal employers should also plan to make changes in payroll and timekeeping software, and consider whether training is necessary for staff regarding new timekeeping operational practices.

Additional information about this development is available here.

To learn how REDW can assist your organization with issues like this, please contact Carol Cochran or Lisa Wilcox.