Department of Labor Overtime Rules: Options for Counties
By: Pete Obermueller, WCCA Executive Director
On May 18, 2016, Vice President Joe Biden, Secretary of Labor Thomas Perez and Sen. Sherrod Brown (D-Ohio) announced the U.S. Department of Labor’s (DOL) final rule on overtime pay. The rule amends regulations under the Fair Labor Standards Act (FLSA) that determine which employees are eligible for overtime pay, and nearly doubles the maximum salary for overtime eligibility from $23,660 to $47,476. The rule will take effect on December 1, 2016 and applies to executive, administrative and professional employees – collectively referred to under FLSA as “white collar” workers.
Neither State nor Local governments are provided a blanket exemption under FLSA or the DOL’s overtime rules. However, there are several considerations to explore to be sure that your employees will even be affected by the changes in the rule:
- Hourly workers are not affected because they are already entitled to overtime or comp time if they work more than 40 hours.
- Workers who only work a regular 40 hour workweek are not affected as long as they do not work overtime, and there is no chance that they will work overtime in the future.
- Elected officials and their personal staff and policy advisors who are not subject to civil service laws of the State of Wyoming are not affected by the rule.
If you find that your employees are still affected, or potentially affected by the rule change, you have several options. One of these options is unique to state and local governments.
Option #1: Salary increase – simply raising the salary to the new cap immediately exempts your employee from the overtime rules. If you have employees that are close to the threshold and have overtime duties, this option may make the most sense. However, keep in mind that unless something changes, the salary level will continue to increase over the course of the next decade.
Option #2: Keep salaries the same, but pay overtime. Overtime must be paid at time and a half, and can add up if it is significant. This option makes the most sense if you have employees that are not close to the threshold, and has limited overtime or you can rearrange their work duties to prevent overtime. You also have the option of simply prohibiting overtime and help workers manage their time and workload to account for that prohibition. Understandably, that may not be feasible for some jobs.
Option #3: Keep salaries the same, but negotiate a compensatory time agreement with your employees if one does not already exist. This option is only available to state and local governments (not the private sector, which must pay overtime). In order to avail yourself of this option, you must have an agreement or MOU with any union that collectively bargains on behalf of your employees or an individual agreement with the employee. It is advisable to then add this policy to your employee manual. Comp time must be given at time and half: one hour of overtime receives 1.5 hours in comp time. This option is my preferred option for counties, particularly if overtime is infrequent, or goes through short spikes like elections officials because it will result in the least impact to your payroll budget.