Overtime Angst

Navigating the new rules

If it's the exceptions that make the rule, this one's a humdinger. The Labor Dept.'s new overtime rules went into effect in August, marking the first update of the Fair Labor Standards Act since 1975. At first glance, the regulations seem simple enough: guaranteed overtime pay for salaried workers earning less than $23,660 annually, up from $8,060.

Then it gets complicated. Many employees who earn more will still qualify for overtime. There are new exemptions for some executive, professional, administrative, and outside sales posts. Businesses that don't comply get to worry about fines and, worse, lawsuits.

Whether a worker gets overtime depends largely on his responsibilities. Benchmarks such as a job title no longer offer guidance. Someone who isn't a certified public accountant, for example, might not get overtime if she is doing a CPA's work. In the past, an administrative assistant might not have been paid overtime if her job required "the exercise of discretion and independent judgment." Now, employees get overtime unless their "primary duty includes the exercise of discretion and independent judgment with respect to matters of significance" [italics ours]. So a clerical employee who also hires vendors -- requiring judgment -- might not qualify for overtime, while one who types memos and sometimes handles payroll might.

Penalties for noncompliance start with a $1,100 fine, but it's the lawsuits from aggrieved employees that can be truly damaging. "The liability for small business can be devastating," says Victoria A. Lipnic, Assistant Secretary of Labor for Employment Standards. To protect yourself, start with the Labor Dept.'s FairPay Web site (www.dol.gov/esa/regs/compliance/whd/fairpay/main.htm), which includes video seminars, legal resources, and a list of district offices, whose staff can give you a free phone or on-site consultation. Contact your state labor office if you're doing business in states that have laws superseding the federal ones. Trade associations groups may also offer advice.

Finally, consider a written policy to shield your company and give employees a way to make complaints. (Find a sample on the Labor Dept.'s site.) When in doubt, "You can always err on the side of caution and pay somebody overtime," says Mike Aitken, director of governmental affairs at the Society for Human Resource Management in Alexandria, Va. A sad comment on our litigious world, perhaps, but still good advice.

By Catharine P. Taylor

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