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HR Corner

Date: 8/26/2016

Thus far, 2016 has been filled with changes - specifically, the new overtime rules. Although they may be new to employers, this is a long-awaited "remodeling" as the rules have not been updated since 2004. Set in place by the Department of Labor, the updates to the overtime regulations have increased the salary threshold for an employee to get overtime from $455 a week to $913 a week, explained Fast Company. The Economic Policy Institute predicted that these changes will affect around 12.5 million Americans.

This is scheduled to go into effect on December 1, but human resources employees need to begin anticipating changes sooner rather than later. While employees might be rejoicing at the increased salary threshold, business owners might be a little less optimistic. Entrepreneurs within the self storage industry must understand the logistics of this rule in order to prepare their businesses. To help provide some clarity, here are a few ways the new overtime rules may affect self storage businesses:

A shift in job titles

Fast Company reported that employers can comply with the new rules by raising workers’ salaries so they meet the minimum requirement of $47,476 which would disqualify them from overtime. To do this, the Society for Human Resource Management explained that employers will start by shifting role descriptions.

The source spoke with Cathy Shepard, senior rewards and talent management consultant at Mercer, who explained that companies have already started scaling back. For example, jobs lower on the totem pole have been shifted from salary to hourly wages. Others will choose to undergo a staffing review to assess if overtime is within their means, or if it would make more financial sense to just hire a second employee. In either case, employees won’t be happy because they won’t actually see the extra money.

Stiffened flexibility

This shift in job title also means a shift in flexibility. The Washington Post reported that many employers are going to have to start monitoring employee’s hourly work output more diligently. Alex Passantino, a partner at the Washington D.C. law firm Seyfarth Shaw, told the source that the flexible culture employees have grown accustomed to is in jeopardy.

“Because of the population this impacts,” Passantino said, “employers are either going to fundamentally change the nature of those jobs and take away remote access, or they’re going to have to come up with some kind of policies that address those situations. In more cases than not they’re going to lose that flexibility, [though] I don’t think it’s going to happen across the board.”

A change of pace in recruiting and promotions

Experts who shared insight with SHRM believed that recruiting efforts would take a big hit. For one, the shift in job titles and accompanying salaries is going to look less attractive to prospective hires who might be looking at larger companies that can afford to raise the minimum salary to meet the standard value that would exempt them from overtime. In fact, current employees who have already been forced to make the salary shift are reporting negative feedback, explained Robert C. Barber, attorney for AT&T. They see it as a demotion. “The change to nonexempt adversely affects employee morale; not only because of the loss of independence and flexibility in performing their work, but because of the concern that the change reflects a lack of trust in and misperception of their skills and professional trade,” Barber informed SHRM.

Failure to comply could lead to a host of legal implications

HR departments need to address this immediately in order to beat legal repercussions. Fortune spoke with another attorney at Seyfarth Shaw, Richard Alfred, who predicted that lawsuits regarding overtime were going to spike to about 9,000 – an 8% increase since just last year. Changing duties and job descriptions for evolving positions could create some ambiguities, and room for legal backlash if they are not clearly defined.

It is the employer’s responsibility to be fully aware of the new definitions of overtime. An HR professional, or HR outsourcing company, can assist with any unanswered questions and help thoroughly research options before reclassifying employees. At AlphaStaff, we can assist in navigating through complex HR topics. Managing the intricacies of minimum wage, overtime, and exempt vs. non-exempt issues can seem simple, but if mismanaged can lead to costly legal exposure. Through our certified Human Resources practitioners and skilled professionals, we are able to assist employers to minimize these types of exposures while still allowing the employers to make the decisions that make sense for their operations. At the end of the day, we do the heavy lifting by providing compliance guidance and allowing you to focus on your business. To find out how AlphaStaff can provide you with tools and services to educate you on employment practices that can affect your business, please contact our Vice President of Strategic Business Development, Jeniece Carter-Henson, at or at (727)365.6722.

NOTE: The information contained in this article is not legal advice or a substitute for legal counsel.