News and Best Practices

What You Need to Know About the New Overtime Rule

August 12, 2016

Overtime pay: It can be costly to dispensary operators, and most try to structure their staffing and scheduling to avoid it if possible. But new regulations on the overtime rule from the Department of Labor that take effect Dec. 1, 2016, may require you to pay overtime to employees you wouldn’t have had to in the past.

The new overtime rule is complex, and you’ll want to review it and discuss it with your HR advisor. But here’s a “what you need to know” briefing to get you started.

The biggest change is a significant increase in the exemption threshold. Right now, white-collar workers making more than $23,660 a year are exempt, meaning they aren’t eligible for overtime pay. Since salaried managers and assistant managers often earn more than $23,660, you probably haven’t been required to pay them overtime when they work more than 40 hours per week.

But starting Dec. 1, the exemption threshold jumps to $47,476, which increases the likelihood that you have employees who will be due overtime in the future.

General parameters of the new overtime rule

Salaried employees who make less than $913 weekly or $47.476 annually are generally within the new overtime rule. However, the amount paid to an employee is not the only aspect to the rule. The primary job duties of the salaried employee may create an exemption. As the Department of Labor states: “Employers, however, are not required to pay minimum wages or overtime to executive, administrative, and professional employees who satisfy the salary level and other requirements to meet one of the white collar exemptions.”

The “other requirements” that the DOL is referring to are the standard duties test. To see if your managers or other employees meet these requirements and are exempt from having to be paid overtime, click the “General Guidance for Private Business Owners” link below.

Employers should note that merely having the job title of one of the exemptions does not by itself make the employee exempt. The employee’s job duties must match the test outlined by the DOL. If employers misclassify employees to get out of making overtime payments, they can be found liable for back pay and damages.

If you are unsure whether the rule applies, or have other questions, please call the toll free helpline listed below.

The reason for the new rule

The new rule is designed to protect employees who are expected or required to work an abundance of overtime without just compensation. And while the rule changes are pretty significant, many of your employees won’t be affected. It doesn’t change things for most hourly employees. Currently, if they work more than 40 hours in a week, they’re already entitled to overtime. This won’t change.

Since the new rule doesn’t go into effect until Dec. 1, you’ve got a few months to prepare. Those who like to plan long term should also be aware that there will be automatic updates to the threshold every three years, the next being Jan. 1, 2020.

What this means for dispensary operators

If you have salaried employees who will be entitled to overtime, you will need to keep track of the hours that they actually work—which will be a new procedure for most of them. You’ll want them to begin tracking their time. You can use the same time tracking system as the one for hourly employees. But this will be a big change for salaried employees, and you’ll want to hold them accountable for using the system.

You also may want to evaluate whether to restructure certain employees who are on the cusp of the salary threshold. A bump in salary that takes a worker out of the overtime exemption threshold may be advantageous if they are regularly expected to work over 40 hours a week.

You may also want to implement a “no overtime” policy for salaried employees, or consider adding a part-timer to cover some duties of a salaried employee who may need to work overtime.

Additional Resources:

The Department of Labor’s New Overtime Rule: https://www.dol.gov/whd/overtime/final2016/

General Guidance for Private Business Owners, with the exemptions based on job duties explained in depth: https://www.dol.gov/whd/overtime/final2016/general-guidance.pdf

Toll Free Helpline for Employers: 1-866-4USWAGE (1-866-487-9243)

By Devon Landis
Dispensary Management Today articles are for informational purposes only and should not be considered legal guidance or advice on dispensary operations. You should contact an attorney or a qualified cannabis consultant for specific compliance and dispensary/retailing advice.
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