Questions Answered About the Proposed FLSA Changes: Overtime Rule

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changing from non-exempt to exempt proposed flsa changes flsa proposed changes

Accurately categorizing your employees as “exempt” or “non-exempt” from the Fair Labor Standards Act (FLSA) sounds like a fairly straightforward task. But a closer look at the finer details of the FLSA can quickly turn an easy yes/no question into a complex, and somewhat subjective, analysis or job duties, titles, and compensation.

According to the U.S. Department of Labor’s (DOL) Wage & Hour Division, the current administration is looking to, “simplify the overtime rules for employers and workers alike,” specifically in the area of white collar exemptions, and has recently completed a comment period for new set of proposed overtime rules.

Although it is up for debate whether or not the proposed rules have achieved this goal of simplification, employers need to be aware of what these changes are and begin to prepare themselves for 2016 when some version of these rules are likely to be implemented.

What is changing (more than likely)?

The salary level required to be classified as an exempt employee for both standard and Highly Compensated Employees (HCEs) will increase.

The existing standard salary threshold to qualify as exempt, is set at $455 per week. The existing HCE threshold is $100,000. The proposed new rule sets the threshold for both categories based on average weekly earnings for full-time salaried workers. For standard salaried employees the 40th percentile mark will be used and for HCEs, the 90th percentile will be used. In terms of what these percentiles mean for setting actual dollar amounts, based on 2016 projections from the DOL the new thresholds will be $970 in average weekly earnings for the standard level and $122,148 annually for HCEs.

The bottom line: The specific dollar figures cited in the proposed language may be adjusted in the final rule, but in short, the salary amounts required to be considered exempt from the white collar overtime rules are going up in 2016.

Both salary levels (standard & HCE) will be scheduled to increase on an annual basis.

The numbers currently on the books have not changed since the last set of rule changes in 2004. The latest iteration of the white-collar exemption language will increase annually in one of two ways, either: (1) attaching directly to the 40th (standard) and 90th (HCE) percentiles of earnings for full-time salaried employees or (2) adjusting both levels based on inflation (CPI-U).

The bottom line: Instead of going through the rulemaking process to increase the exemption thresholds, they will go up on an annual basis—based on what statistic is still to be determined.

What else was being considered as part of the proposed rulemaking during the comment period?

The DOL was looking for comments on two additional items, but is not planning to make regulatory changes based on this feedback.

(1) The so called “duty test”, which is the next step in determining an employee’s exempt status, was also up for discussion. However, instead of implementing wholesale, official regulatory changes, the DOL was looking for additional examples of job titles and practical job duties that could be used as guidance for determining exemption status. (2) In addition, they were gathering opinions about whether or not nondiscretionary bonuses can/should be factored into the average weekly earnings of the standard salary calculation.

The bottom line: The DOL wants to gauge if the “duty test” is working as it should and provide more practical guidance to make it more objective. However, they don’t plan to incorporate any official regulatory changes regarding “duties” into the final rule at this time.

What can employers do to prepare?

Until the final rule is announced, the key for employers will be to begin gathering the information necessary to apply the new test once it is known. Not only will this head off any current misclassification that you may uncover in the process, but it also situates employers to act as soon as the DOL releases the final language.

First and foremost, employers may want to perform an internal audit of their job titles and descriptions to ensure that they are appropriately classified as exempt or non-exempt. While employers always make sure jobs are classified correctly at the outset, these duties can look very different a few years down the road.

As individuals and job duties evolve depending on the skill set of the employee, the needs of the organization, or even changes to technology, HR isn’t always kept apprised of these changes in a timely fashion.

Taking stock of exactly what duties are being performed and making any necessary changes to job descriptions on a fairly regular basis can help prevent misclassification. In the case of the proposed changes to the FLSA, going through this internal review process is particularly important for any non-exempt employees making more than the current $23,600 figure, but less than the new threshold.

The bottom line: Be prepared. There is some down time between the close of the comment period earlier this month and the expected announcement of the final rule in 2016. Make use of this time to gather the job duty information now, so you can act promptly and efficiently when the time comes.

ERC Training provides FLSA Training which provides a high-level review of the law's elements and requirements.

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In a Hurry? Create an Excel Chart by Pressing Just One Key

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In a Hurry? Create an Excel Chart by Pressing Just One Key

We have all heard the phase that "a picture is worth a thousand words.” A picture tells a story just as well as a large amount of descriptive text. That can also be said of a chart in Excel. That column or pie chart might be more informative then rows and columns worth of numbers.

A fast and easy way to create a chart sheet in Excel, is to select your data to chart (including row and column labels) and press the F11 key. This is a keyboard shortcut to create a chart sheet. The default chart type is a column chart.

If you do not want a column chart, right-click on the chart and choose the command, "Change Chart Type.” There are many chart types to choose from (lines, pies, bars, and others).

If you do not want your chart on a separate sheet, right-click on the chart and choose the command, "Move Chart.” You can move your chart as an object to an existing worksheet.

Once the chart is created, explore the Design and Format Tabs to make changes to styles, layouts, and colors. Have fun and happy charting!

ERC provides Microsoft Excel training for basic, intermediate, and advanced users.

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Take Advantage of Outlook Quick Steps to Perform Multiple Actions in One Click

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Take Advantage of Outlook Quick Steps to Perform Multiple Actions in One Click

Managing and staying on top of your email is important to everyone. With Quick Steps (a feature in Microsoft Outlook 2010 and 2013) you can apply multiple actions at the same time to email messages. This helps you quickly manage your mailbox. For example, if you frequently move messages to a specific folder, you can use a Quick Step to move the message in one click. Or, if you forward messages to your manager or peers, a one-click Quick Step can simplify the task. 
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Survey Reveals Interesting Differences in How Organizations Select Candidates

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Survey Reveals Interesting Differences in How Organizations Select Candidates

While nearly all (98%) Northeast Ohio organizations conduct interviews as a means of evaluating job candidates for both exempt and non-exempt positions, data from the 2015 ERC Hiring Trends & Practices Survey reveals interesting differences among those that utilize other methods of selection.  

Differences in selection methods for exempt and non-exempt positions

Drug testing, physical exams, and employment knowledge or ability tests are performed more often for candidates applying for non-exempt positions. On the other hand, more employers use reference checks and pre-screening phone interviews for exempt positions. In addition, compared to non-exempt positions, ERC’s research found that 25% more organizations invite candidates applying for exempt positions back for a second interview.
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Does Your Organization Do This When it's Faced With Change?

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Does Your Organization Do This When it's Faced With Change?

Change is inevitable. But it’s how you lead and manage change that makes the difference. Companies that accept and embrace change are healthier, more dynamic, and faster growing than those companies that fear change.

Tom Ault, Director of Technical Training at ERC and Senior Consultant, talks about leading and managing change.

Stop, challenge & choose

When faced with change, we typically put our own negative spin on it, often without knowing all the facts. Our natural tendency is to see change as a threat—our brains are hardwired to be risk averse—rather than seeing the positives.

There are three simple commands that we teach people to consciously think about when dealing with a perceived negative like change.

  1. Stop: When change first occurs, do not automatically turn to a negative response. Instead, stop, and don’t act or decide anything. Mentally disconnect and take a deep breath. Try to center yourself and observe the change that is happening.
  2. Challenge: Now that you had a moment to process instead of react, challenge yourself to find positives in the situation. Ask yourself “What am I telling myself? What evidence do I have that supports or contradicts my interpretation, and what are other possible interpretations?
  3. Choose: Once you have challenged yourself to find the silver lining in the change, ask yourself “What would have been my ideal response?” And “What interpretation would help me produce my ideal response?” Once you choose it, make sure to use it!

Three levels of change

Change in organizations happen at three levels: How you manage yourself, how you relate to others, and how to lead across the organization.

  1. It starts with yourself since it is difficult to lead others through change if you are not committed.
  1. Next is leading others. You have to be able to go by these rules:
  • I can be a role model and encourage people that work in my team on how best to react to change.
  • I have to be sensitive to their reactions and feelings to help them manage through it.
  • Not everyone will react the same way and have the same feelings.

    It is important to get those feelings out in the open; so it's best to address them.
  1. And last, leading across organizations requires understanding that change is an individual choice and needs to happen one person at a time. Communication in various forms and on a regular basis is important if you want people to buy in. There must also be a feedback loop where you actively solicit concerns and roadblocks to change so they can be addressed.

So ask yourself these questions when dealing with these levels of change:

Self

Others

Organizationally

  • How do I deal with change?
  • What messages am I sending?
  • What is my level of involvement?
  • What is the appropriate level of involvement?
  • What help will/do others need?
  • How do I impact others thinking to gain commitment?
  • What am I doing to communicate and encourage debate?
  • Am I engaging others and escalating concerns?
  • How do I lead change across an organization?
  • What methodology can I use to ensure success?
  • How do I ensure feedback loops?
  • How do I ensure resistance is managed?
  • How do I influence all levels in the organization?

Every person within an organization has a roll when it comes to organizational change. In order to have effective change, there must be involvement and action displayed by many within the organization.

Leading and Managing Change

The image above helps to visualize that change occurs along two main paths:  a project management path that focuses on the system or process changes, and a change management path that focuses on the people side of the change.  Many organizations focus on the project path and are then surprised when there is no buy-in from their people.

Organizations that assign these roles and responsibilities to a change initiative will find better success:

Change Management

This group can be made up of one or more change agents who monitor the people side of change by checking for resistance and ensuring the other roles are in alignment and are focused on their roles.

Senior Leader

This group is the top contributor to the overall project success according to Prosci, Inc. benchmarking studies. Senior leaders are one of two preferred senders of messages about change.

The role of this group is to participate actively and visibly throughout the project. They build the needed coalition of sponsorship with peers and other managers. They also communicate the business message about effective change with employees.

Managers & Supervisors

Managers and supervisors are the other preferred sender of messages about change. This group has a unique and well-developed relationship with the employees being impacted by the change.

But what is this group’s role? They communicate the personal messages about the change with their direct reports, conduct group and individual coaching sessions and identify, analyze and manage resistance. They also provide feedback to the appropriate levels in the organization.

Employees

This group makes changes to how they do their day-to-day work. Their acceptance and use of the solution determines the success of the project and the ongoing benefit derived from the change.

This group’s role is to seek out information related to the business reasons for change and the personal impact of the change. They provide feedback and reaction to the change and the change management efforts. A key role is for this group to be proactive when dealing with change, rather than being “victims” of a change.

Project Team

This group designs and develops the ‘change’—they are the ones who introduce new processes, systems, tools, job roles and responsibilities. They also provide much of the specific information about the change to the other stakeholders.

This group’s role is to provide timely, accurate and succinct information about the change (or project). They also integrate change management activities into project management plans and activities.

Why do people resist change?

Managers and employees resist change for different reasons.  Managers may fear losing control and authority, comfort with the status quo, have no involvement in solution design, or have an answer for what’s in it for them.

Employees resist change due to lack of awareness, fear of the unknown, lack of job security and sponsorship.

Whatever the reason for resistance, change is inevitable. It’s how you deal with it yourself, with others and with your organization that will depend on if your company will spiral out of control or grow and conquer.

Change Management Training Course

Change Management Training Course

In ERC's Change Management training, participants will learn strategies for helping themselves, as well as others, through change. They will acquire the confidence and skills needed to face change.

Learn More about Change Management