PPB January 2020

not include nondiscretionary bonuses, incentive pay and/or commissions. The DOL estimates that 101,800 current HCEs will be affected by the new ruling unless their salary is increased. Next Steps Since this change went into effect January 1, 2020, we recommend that employers take the following steps if they have not already done so: Step 1 - Identify which white-collar and HCE-exempt employees will fall below the new salary levels. Step 2 - Review job duties to ensure exempt employees clearly meet the applicable duties requirement; if they do not, then, regardless of their salary, they should be reclassified as non-exempt. Step 3 - Calculate the costs and consider the options for employees who meet the job duties tests but whose salaries fall below the new $684/week, $35,568 annual salary minimum. Your options include: • Re-classifying these employees as non-exempt, tracking and recording their time, paying overtime and minimum wage, and including time as compensable such as travel time, waiting time, etc., or • Increasing these exempt employees’ salaries to meet the new exempt salary minimum, or • Structuring pay for non- exempt employees so they still receive a salary but track their time and receive overtime for all time worked in excess of 40 hours a week (or your state’s overtime requirements). Step 4 Communicate your plan with the employees affected so they know what to expect and why the change has occurred. Step 5 Document everything. Important Notes For Consideration: 1 If there is uncertainty when classifying an employee, you must classify the employee as “non-exempt” as it benefits the employee by being eligible for overtime and earning at least minimum wage. 2 An employee cannot waive his or her right to protection under wage-and- hour law. So even if employees want to be classified as exempt and salaried because they don’t want to track their time or they want to help you out, you are still liable for any misclassifications and underpayment that results from the misclassification. An employee who is okay with the practice now may not be in two years and would be within his or her right to bring a claim against you. 3 Wage-and-hour mistakes can be time-consuming and expensive as the DOL investigation may go back two years and include back wages, back overtime pay and penalties. And if the violations seem egregious, they can go back three years. Also, if one employee is deemed to be misclassified, the DOL will check all the employees in that job group, meaning you would be responsible to pay back wages and punitive damages for multiple employees even if they did not complain. 4 After the previous changes in 2004, there was a dramatic increase in wage-and-hour claims from employees thinking they were misclassified and should have been receiving overtime. Chances are, another bump will happen again this year as the administration and media promote the fact that more than a million workers are now be eligible for overtime. Remember, you’re only as safe as your last bad hire. It is best to make sure you’ve classified your employees correctly before they do. For more details about this rule change, read the DOL Factsheet #17G at https://www.dol.gov/ whd/overtime/fs17g_salary. htm or review the full rule at www.federalregister.gov . Paige McAllister, SPHR, is vice president, HR Compliance at Affinity HR Group, Inc., PPAI’s affiliated human resources partner. Affinity HR Group specializes in providing human resources assistance to associations such as PPAI and their member companies. To learn more, visit www.affinityhrgroup.com . If there is uncertaintywhen classifying an employee, you must classify the employee as “non-exempt” as it benefits the employee by being eligible for overtime and earning at least minimumwage. 94 | JANUARY 2020 | THINK