Under revised FLSA, overtime status unchanged for many workers

HR professionals who rushed to comply with the Aug. 23 deadline for new white-collar overtime rules say they found that the regulations did not force substantial changes in the overtime eligibility of their workers. However, many said that the exercise of evaluating whether specific workers qualify for exempt status under the Fair Labor Standards Act (FLSA) has been useful and in some cases has prompted an overdue review of pay practices.

And, despite the Sept. 9 vote in the U.S. House of Representatives to block enforcement of the changes the revised rules are the law of the land.

"I'm glad this is finally happening. After months of hearing about these rule changes and what it means to employers and to HR, we're getting the chance to work with the rule changes and do our jobs," said Brenda Franklin, SPHR, an HR manager for a financial services company in North Dakota. According to Franklin and other HR professionals interviewed for this article, the job of ensuring that their organization complies with the rule revisions has proved to be much less problematic than they originally expected.

Lawrence Lorber, an employment attorney and partner in the Washington, D.C., office of the law firm Proskauer Rose, has followed the overtime rule revision saga closely and testified at several congressional hearings about the rule changes on behalf of the Society for Human Resource Management.

"The new regulations aren't a huge sweeping change, and most job classifications will remain the same," he said. "However, that doesn't mean employers shouldn't worry about complying with the rules. Conducting thorough classification reviews is very important because the Labor Department will look more favorably on employers that do make good-faith compliance efforts."

More than a dozen organizations were contacted for this article, and almost all said they done a classification review of their positions or that such a review was under way, with outside attorneys and in-house counsel.

"The review definitely helped us get a better grasp on how we should classify our job positions," said Nancy Stanton, HR director for the Huron Medical Center in Bad Axe, Mich. "We concluded that we actually had done a good job in defining the positions and job duties. We identified one, maybe two positions that we are now considering changing from exempt to non-exempt status."

That change could actually lead to some harsh feelings from employees, Lorber warned.

"Many employees see being exempt from overtime as a status symbol," said Lorber. "As an exempt employee, they don't have to keep track of their hours or fill out time sheets. But when that suddenly changes, it can seem like a demotion to many people."

This underscores the importance of explaining classification changes fully to affected employees and making certain that the employees understand it is a matter of compliance with the law and not one of demotion or job reassignment, said Franklin.

"But once they get their first overtime check for working late or on a weekend, they tend to get over their hurt pride pretty quickly," she added.

If an employer determines that a certain job position is incorrectly classified as exempt under the new rules, Lorber said, it's highly likely the job wasn't classified correctly under the old rules. Changes made to comply with the new rules don't cure violations under the old rules, but the Department of Labor is expected to take a largely forward-looking approach to enforcement.

COPYRIGHT 2004 Society for Human Resource Management
COPYRIGHT 2004 Gale Group