You have until December 1 to get ready for the changes in the US Department of Labor’s Fair Labor Standards Act — but why wait until the holiday season to make sure you’re in compliance?  The update to the overtime law will extend overtime benefits to 4.2 million workers, and it’s possible that some of your employees are included.

This act is being called “overtime for white color workers,” which probably makes little sense to the younger generation that doesn’t remember a time when manual laborers wore blue shirts and office workers (the men, that is) work white shirts and ties. The original concept of time-and-a-half for blue collar workers was intended to limit the work week to 40 hours. Those working more than that were compensated at one and a half their usual hourly rate, providing either a financial incentive to employees for only requiring 40 hours of work — or an attractive bonus for those who did work more, depending on your point of view.

Most retail workers have always been covered by this standard, especially in small shops.  However in larger operations such as department stores and franchises, managers sometimes have been paid a salary and not compensated if their hours in a seven day work period exceeded the usual 40.

This led to the common practice of requiring managers to work long hours, and to giving full-time employees an assistant manager title in order to avoid paying overtime. Not every retailer abuses the system, of course.  Some place an emphasis on the work-life balance and do not require overtime from their managers, and others undoubtedly offer compensation for extra hours worked.

One way of determining eligibility for overtime has been a salary threshold. Starting December 1, this will decrease to $913 a week ($47,476 for a full-year worker), so most employees earning less than this will be eligible.  This means that 35 percent of full-time salaried workers (and the vast majority of retail workers) will be automatically entitled to overtime, based solely on their salary.

The other means of determining eligibility for overtime is the duties test, for example whether a retail “manager” spent more than 20% of his or her time providing customer service.  But according to the new ruling, “the higher salary threshold means more workers’ entitlement to overtime pay will be clear just from their salaries. For workers with salaries above the updated salary level, employers will continue to use the same duties test to determine whether or not the worker is entitled to overtime pay.”

For further information, and to make sure that you will be in compliance, visit the US Department of Labor web site, www.dol.gov.

Happy Retailing,
Carol “Orange” Schroeder

The art featured above is “City Building” from “America Today” (1930-31), Thomas Hart Benton

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