Be prepared for changes to overtime rules and minimum wage

Changes to the FLSA rules on exempt status are likely to impact your business. Taking a proactive approach and conducting an internal audit of your salaried/exempt positions now will position you to respond effectively. If you haven't already prepared, do so now.

What can you do to be prepared?

• Review the job responsibilities for all salaried/exempt positions to ensure each meets the duties test for exempt status. If you have positions that are border line, you might consider changing their status to non-exempt/hourly.
• Additionally, look at the salary level for each salaried/exempt position. Those that are under $50,440 per year should be flagged for further review and analysis.

Once you have identified the positions that do not meet the guidelines, you can begin to analyze the impact of making changes. Again, you will need to consider whether it makes more sense to change the status of the position, or to raise the salary level.

It’s important to consider the impact of these changes to your store’s bottom line. Here are some key questions to consider as you begin the analysis:

• How will it impact the bottom line if you raise the salary level to $50,440?
• Is it reasonable to accomplish the responsibilities of the position in 40 hours per week, thereby avoiding overtime if the position status is changed to hourly/non-exempt?
• How will changing the status of certain (potentially key) positions to hourly/non-exempt impact employee morale and overall workplace culture?

Minimum wage

And while you are conducting this compensation audit, you might want to map out the impact of an increased minimum wage at the same time. Exploring the impact of paying all entry-level employees at least $15 an hour is less stressful while it’s theoretical. A relatively simple spreadsheet will allow you to play around with various scenarios and easily analyze the impact of pay increases to the labor line. While the minimum wage in your state may not increase to $15 an hour, it is likely to increase more quickly in the future than it has in the past. It’s better to be prepared than to be caught off guard.

Compensation philosophy

If you don’t already have one, developing a compensation philosophy now will enable you to better communicate changes down the road. Be transparent with your employees by sharing as much information as you can about the compensation philosophy of your business. Remember, they are reading the news everyday just like you are. Helping them to better understand how these changes will impact the business as well as their paychecks will benefit everyone in the end.