To Pay (Overtime) or not to Pay (Overtime) - That is the Question! - from Conway Center member Sharon DeLay of GO-HR - Conway Center for Family Business

Should you pay overtime or not pay overtime? That really IS the question for so many businesses. Quite frankly, the news last week out of Ohio (and that state up north) has not made this fundamentally easier to answer for any of us. If you’re not in Ohio or that other state, you should still pay attention to this email!

The U.S. DOL wrapped up an investigation into a Detroit-based law firm that misclassified many of its administrative workers – to the tune of $112,000 in back wages and damages! While it’s comforting to know that even law firms get it wrong, it should be a warning to every business owner that while paying every employee a set salary each pay period is easier, it’s not necessarily better (or right). With few exceptions, if your employees are not making $684 per week, they’re not meeting the first threshold to be an exempt employee. (For simplicity, think of exempt as salaried). However, there is a second threshold that must be crossed to get closer to an exemption status and that is the duties test. And it’s not about just meeting one of the duties outlined in the various fact sheets, it’s about meeting all the duties.

Here is an example of how many employers misclassify their employees who do computer-related occupations. For this example, we’ll assume the employee earns at least $684 per week. Many employers (wrongly) assume because an employee works on a computer, such as serving as a trouble-shooter at a help desk, for example, the employee meets the exemption test because the employer fails to look beyond “computer-related.” (Technically, aren’t we all in a computer-related occupation? I feel like my keyboard is permanently affixed to my fingers!) If you review the fact sheet for computer-related occupations, there are specific primary duties that must be met to secure the exemption, and if those cannot be demonstrated, the position should not be classified as exempt. When employers ask us whether a position is exempt, we recommend doing a detailed analysis, ensuring the job description for the position reflects the language of the exemption, and that everyone is confident that if the employee in the position is interviewed by the Department of Labor, they could describe and demonstrate how they meet the exemption. Of course, this goes without saying, you should fully document your analysis to demonstrate a good faith effort. Will this protect you if you ever are audited? No. Will it potentially result in fewer fees and penalties or compliance? Maybe. Hopefully.

To further complicate things for employers, Ohio passed Senate Bill 47 last week that appears to give employers relief over navigating the “Is this overtime compensable or is it not” struggle. Look, as a business owner, I am 100% guilty of playing email catchup every evening after the 8 to 5 workday ends. If I did not do this every evening (and most weekends, to be honest), I’d never answer client emails or delegate the work to my team that needs to get done. I generally do not expect responses from the team, nor do I want to get in the habit of “work” spilling over into their personal and family time. This bill is not a free-for-all to get extra work out of your teams with no expectation to pay them; instead, this bill attempts to clarify as non-compensable the periods an employee may spend between their scheduled working times completing a task that is not otherwise specifically directed by the employer. The bill provides specific language of what might not be compensable as overtime, including:

  • “Walking, riding, or traveling to and from the actual place of performance of the principal activity or activities that the employee is employer to perform;
  • Activities that are preliminary to or postliminary to the principal activity or activities;
  • Activities requiring insubstantial or insignificant periods of time beyond the employee’s scheduled working hours.”

The exceptions are if the employee is performing tasks during the regular workday or during prescribed hours, or if the employee performs the activity at the specific direction of the employer.

So, if you call me and ask me what to do with this information, here is what I would tell you:

  • Set expectations with your staff, especially those who are non-exempt (hourly), about how you will communicate after hours and how you will identify what is actionable and not actionable. (Honestly, they’ll appreciate this, too.)
  • If you do delegate emails and other work to employees after hours, and an employee responds, DO NOT RESPOND unless you are requesting that they work (or implying approval of their potentially compensable working activities).  
  • Even if you can, it doesn’t necessarily mean that you should…remember that work-life balance is important to nearly everyone (although it is often uniquely expressed), so unless you’re an emergency room, a fire department, or something else that is equally life and death, most things can wait until the next day.  
  • Tread carefully. Even though there is some additional protections for you, employer, against a class action lawsuit without employees opting in via written consent, do you really want to be the guinea pig testing all of this out?

We suggest that you employ clear communication, documented activities, and careful consideration with what you do. Reach out to your various partners for assistance in navigating all of this.

As always, we’re here to help.

Sharon DeLay, MBA, SPHR, SHRM-SCP, CPCC

President and Owner, GO-HR

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