Crystal Investment Property recently had a Q & A With Mammoth HR on an important issue that will be raised with the new FLSA Rules on overtime pay.
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FLSA Overtime Changes: What Employers Need to Know
Q: “When a manager is live-in and on site, how is it best to address potential overtime charges for that person without necessarily increasing pay to the $47k+ new salary threshold?”
A: “It’s important to begin by clearly defining the period of work for any live-in hotel employee. Essentially, a work schedule should be provided just as it is for any other employee. Additionally, we recommend implementing an off-the-clock work policy that informs all non-exempt employees that work outside of the stated schedule is prohibited by the company. Of course any time worked must be compensated, but a clear policy with the company’s expectations will help reduce working outside of stated schedules.
The FLSA allows an employer to define sleeping time for employees who are required to be on duty for 24 or more hours (the same is not true for a shift of less than 24 hours, even if sleeping is permitted). A regularly scheduled sleeping period of no more than 8 hour is permitted via a written agreement, so long as adequate sleeping facilities are provided. It should be noted that if the sleeping period is interrupted to the extent where an employee doesn’t receive at least 5 hours of sleep, the entire period of time must be paid. Additionally, any time interrupted for the performance of work must be paid.
Beyond this, employers will need to adjust schedules for newly non-exempt employees to reduce or avoid overtime. There are a number of allowable salary non-exempt pay options that an employer may consider as well. These don’t eliminate overtime pay (as required for all non-exempt employees), but they provide alternative pay options.
For example, it is permissible for an employer and employee to agree to a fixed salary for a workweek of more than 40 hours, but the salary must include the applicable overtime in the calculation. Additionally, if the employee’s hours worked change in any way during any week (either by working additional or fewer hours), the employer must adjust the salary for that week. This method of pay is often best for employees who consistently work the same number of overtime hours each week. This is best illustrated by example, and the Department of Labor provides the following:
Example: Andre, a manager on a construction project, has an agreement with his company where he is paid a fixed salary of $39,520 per year ($760 per week) for a 45 hour workweek. The fixed salary includes both straight time for the first 40 hours ($16 regular rate x 40 hours) and overtime compensation for hours 41-45 ($24 overtime rate x 5 hours). If Andre’s schedule changes in any way for any week, his salary needs to be adjusted to reflect the hours actually worked for that week.”
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