Time Over Time
One of the basic principles of the American workplace is that a hard day’s work deserves a fair day’s pay. Simply put, every worker’s time has value. A cornerstone of that promise is the Fair Labor Standards Act’s (FLSA) requirement that when most workers work more than 40 hours in a week, they get paid more.
And beginning July 1, 2024, nearly 4 million additional workers will be eligible for overtime pay thanks to the Labor Department’s new salary threshold for certain exempt employees. Under these new guidelines, lower-paid salary workers who work more than 40 hours a week will receive overtime protections. Say hello to time and a half and possibly even double time for some of your most valuable employees.
Who Qualifies for Overtime? The rule impacts standard salaried workers and those considered “highly compensated employees” who make under certain thresholds. It will kick in this year.
On July 1, 2024: If you earn less than $844 per week ($43,888 per year), you are eligible for overtime. HCEs who earn less than $132,964 per year are also eligible for overtime.
On January 1, 2025: If you earn less than $1,128 per week ($58,656 per year), you are eligible for overtime. HCEs who earn less than $151,164 will also be eligible for overtime.
Beyond 2025: The thresholds will further increase every three years beginning on July 1, 2027.
Don’t forget that the white-collar exemptions have more requirements than just the salary threshold. To qualify for these exemptions, employees must meet three criteria:
- Be paid on a salary basis;
- Be paid at least the designated minimum weekly salary.
- Perform certain duties.
Time to Review Your Pay Practices for Compliance
How can you best prepare for the pending changes? It’s a good idea to start by creating a list of your exempt employees who currently earn between $35,568 and $58,656 a year. You will have to quickly decide whether to raise their salary to meet the new threshold or convert them to non-exempt status. Additionally, you may want to track or otherwise evaluate their actual hours worked to help you understand the potential impact of converting to non-exempt status and to make an informed decision before the effective date.
If you decide to reclassify your employees to non-exempt status, there are many considerations you’ll have to work through, including the following:
How Much to Pay. Will you divide the employee’s weekly salary by 40 hours to determine their hourly rate, or will you factor in the employee’s estimated overtime and adjust accordingly?
Regular Rate Calculations. Overtime premiums are based on the employee’s “regular rate of pay.” Employers are sometimes surprised to learn the regular rate is not simply an employee’s hourly rate of pay or their take-home pay. The regular rate is based on “all remuneration” earned from employment with the exception of eight specific exclusions contained in section 7(e) of the FLSA.
Incentive and Bonus Pay. The regular rate includes all types of compensation – including things like non-discretionary bonuses, commissions, payments for undesirable shifts or duties, and some non-cash payments depending on the circumstances. Keep in mind that most bonuses are not discretionary and must be included in the regular rate. It is common for employers to pay out bonuses based on a formula announced ahead of time and designed to incentivize certain behaviors. Such bonuses are not discretionary.
How to Track Non-Exempt Employees’ Work Time. Employers are required to make and keep records of non-exempt employees’ working time. Before converting employees to non-exempt status, it may require some planning, reconfiguration of workflow, and implementation of new processes or technology to ensure that you are accurately recording their work time. It is best practice to think about these questions in advance and explore multiple potential record-keeping processes to determine which options meet your needs and are cost-effective.
How Benefits Will Be Affected. Do you have different vacation, sick leave, and other policies for exempt and non-exempt employees? You will have to consider how to transition reclassified employees to new programs and train workers and their supervisors on new procedures.
Clearly, the impending changes to the FLSA’s overtime rules represent a significant challenge to employers. However, with careful thought and advance planning, employers can navigate this new landscape with minimal cost and disruption.
By the Numbers
2,000 practices
Mars Inc., of Skittles and Snickers fame, is, oddly, the largest owner of stand-alone veterinary clinics in the United States, operating more than 2,000 practices under the names Banfield, VCA, and BluePearl.
$2,542
the average U.S. dog owner spends per year or $210 monthly on recurring pet costs. Cats average $1,499 per year.
66%
(86.9 million homes) own a pet in 2024. Dogs are the most popular pet in the U.S. (65.1 million U.S. households own a dog), followed by cats (46.5 million households) and freshwater fish (11.1 million households).
38 billion
the amount Americans spent on health care for companion animals in 2023.
Protesting Protests
Google fired people for protesting. Is that legal?
In the span of a week, Google reportedly fired about 50 employees over protests of its cloud computing contract with the Israeli government. The move came after dozens of employees participated in demonstrations and sit-ins at Google’s offices in New York and California.
Google’s forceful response raises questions about the extent to which employees are protected when they bring political dissent into the workplace.
Is free speech protected in private-sector employment? Most likely, no.
Under labor laws—which vary from state to state—peaceful protests could qualify as protected activity if employees were protesting against their working conditions—but even in a situation where that was the case, there are restrictions on how workers can protest.
The laws governing private sector jobs vary from state to state, though at-will employment is the norm in nearly every state. (Montana is the sole exception to this rule.) In states like California, there are clear protections for workers who engage in political protest—but only when it takes place outside of work. As private sector workers, the Google protestors “don’t really have constitutional rights to free speech in the workplace,” according to Cathy Creighton, director of the ILR Buffalo Co-lab, an extension of Cornell University’s School of Industrial and Labor Relations.
If the employees had been protesting against working conditions, the terminations might be legally valid. However, Google has claimed in statements to have “confirmed and reconfirmed” that every fired employee was “personally and definitively involved in disruptive activity inside our buildings.”
“People really can’t wrap their minds around this idea that you don’t have rights in the workplace,” says Creighton, who used to work at the National Labor Relations Board and found that private sector employees who called the agency often didn’t understand the limits of their workplace protections. “You’re allowed to be fired for a good reason, a bad reason, or no reason,” she says. “You could be fired for wearing purple socks. There’s nothing illegal about that.”
While peacefully protesting in defense of your beliefs may be morally commendable, it very well may cost you your job. Something to think about.
REEF Harmony
Marine scientists have given new meaning to the saying, “If you build it, they will come,” thanks to a study showing that pressing play on a recording of sea noises lures underwater creatures back to dying reefs. Coral larvae near the US Virgin Islands in the Caribbean were up to seven times more likely to put down roots at a struggling reef that had an underwater speaker blasting the sounds of a thriving ecosystem. And the noise could attract fish and other underwater life, too, the researchers said. Some marine biologists have already been using reef sounds to try to rebuild the habitats, half of which have died out since the 1950s.
SURVEY SAYS
CASH FLOW CRISIS!
A recent survey by Cash Flow Compass of 750 small and medium-sized businesses reveals a startling trend: on average, these businesses overestimate their cash flow by a staggering 42%.
What does this mean in practical terms? It’s a wake-up call for many business owners who believe they have their financial situation under control, only to find themselves grappling with unexpected cash flow shortages that can jeopardize their business stability and mental well-being. The disconnect between perception and reality often results in missed payments, stalled projects, and a detrimental cycle of short-term crisis management.
Serial entrepreneur and author Mike Michalowicz, known for his book Profit First, highlights the peril of cash flow overconfidence.He explains that this overestimation traps business owners in a reactive mindset, where decisions are made in the heat of the moment rather than with long-term stability in mind.As businesses expand, it becomes crucial for owners to escape this cycle and focus on creating operationally efficient and resilient enterprises.
This insight underscores the importance of not only understanding one’s financial reality but also implementing strategies that support sustainable growth.As businesses navigate these financial challenges, a shift toward a more strategic approach to cash flow management could be the key to long-term success.
Bunny Fluffle
FACT: Did you know a group of bunnies is called a fluffle? Think of that the next time you’re having a bad day.
