How to prepare for the overtime rule

The new overtime rule from the Department of Labor will be implemented on Dec. 1, barring the success of any efforts to stop or delay the rule. It couldn’t come at a worse time for the industry: just before the start of boat show season.

For the next month, business owners need to determine which employees this will impact and how to classify employees so that they are paid fairly per the rule and the business continues to function.

The first thing employers need to do is look at all Executive, Administrative and Professional (EAP) exempt staff and determine how many make less than $47,476 annually.

For boat dealers, this does not include your sales staff. According to the Fair Labor Standards Act (FLSA), there is an exemption for “any salesman primarily engaged in selling trailers, boats, or aircraft, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling trailers, boats, or aircraft to ultimate purchasers.” However, salaried technicians are not exempt, and neither are other salaried staff members who may be traveling for events or working overtime regularly.

If employees are within a couple thousand dollars of the threshold, it makes sense to bump up their salary, especially if they regularly work overtime. For staff members who are not close to the threshold, determine how many hours they usually work in a workweek; if they rarely work more than 40, it may be financially feasible to not bump up their pay because it will be cheaper to pay overtime every once in a while than increase their salary.

Classifying time and realigning job duties

Keep in mind that time spent fielding calls and emails after business hours, on weekends, on holidays and on vacation is applicable under the overtime rule, as is certain travel. While employees traveling as a passenger are not paid for their time, employees who drive themselves or are traveling during regular work time need to be compensated for their time. And work time includes weekends; for instance, if an employee’s normal hours are 9 to 5, any travel during that time block on a Saturday is still considered work time.

“All of that is work, which, if they are determined to no longer be exempt, means the organization must pay for those hours too going forward,” said Adam R. Calli, principal consultant at Arc Human Capital, LLC, a human resources consulting firm that provides support to small- and medium-sized organizations in the U.S.

If you want to avoid paying overtime or bumping up salaries, you may need to reorganize who takes care of which duties. For instance, only employees making above the salary threshold can answer client questions after hours. For dealers who need help with realigning job duties, the Marine Industry Certified Dealer (MICD) program is a great resource for effectively navigating this task.

“Think about your employee workforce and have them work smarter, not harder,” said Nikki Duffney, member & benefits specialist at the Marine Retailers Association of the Americas. “Through [the] Marine Industry Certified Dealer program, we create process maps and look at job descriptions to help dealers – leadership and management – get aligned with what’s going on throughout the entire organization.”

Taking care of your people

Regardless of which route you choose, implementation will require clear, consistent communication with employees about the changes being made, who will be responsible for what and why the choices were made. Calli recommends giving employees your plan for their compensation and working hours to them in writing to avoid potential confusion.

“People might be a little stunned, a little shocked, they go home, they tell their spouse and they start to ask them questions, they try to remember what the guy told them in the meeting,” he said. “If they have something in writing, not only can they refer to it but they can share it.”

If employees are moved to hourly, especially if their hours are reduced, that could be a killer for morale. As will any exempt salaried employees taking on extra work while other employees get to “slack off,” as they may see it.

“I would stress to them that who you are is still who you are, and don’t get lost in this change of classification,” Calli said. “Acknowledging that some people may see this as a demotion is good, because you can put that right out there. … And understand that there may be some emotions that continue to run through December into January and February after the transition, and have the managers be prepared for that, and payroll be prepared for that, because they may see a lot more people at their door asking questions than traditionally is the case.”

If you need more assistance on deciding how to classify employees, the DOL has created webinars for businesses answering questions and providing details on the rule. If you do not have an HR team to help navigate all of these changes, there are HR software products available to help you prepare and properly determine how employees should be classified.

MRAA also hosted a webinar with its partner, KPA, on how to classify exempt and non-exempt employees correctly. KPA also offers an e-guide with a duties test to determine if an employee is exempt or not under the new rule, which you can download on their website or receive with MRAA membership.