What Percentage of Your Workforce Will Be Newly-Eligible for Overtime Pay Under the New Fair Pay Rules?
Upper Saddle River, N.J. - August 2004 - During the months of May-June, Compensation Resources, Inc. surveyed 157 companies to compile data on workforce percentages that will be newly-eligible for overtime pay under the new Fair Pay rules that will take effect on August 23, 2004.
Our survey showed that 30.6% of the respondents indicated that 0% of their workforce will be newly-eligible for overtime pay under the new Fair Pay rules. 24.8% of the survey participants noted that only 1-10% of their workforce will become eligible under the new Fair Labor Standards Act (FLSA) rules. However, interestingly enough, 9.5% of the respondents indicated that they are “Not Sure” of the percentage of their workforce that will be newly-eligible for overtime pay when the new rules become active. This may suggest that many companies are not ready for the new FLSA regulations. In a recent study conducted by Hewitt Associates, it was found that 26% of companies said their biggest challenge is that existing job descriptions are old, incorrect, or inconsistent. Another 24% said their primary issue is with understanding the new rules. Organizations must ensure that they properly classify positions by employees, analyze variations in job duties and responsibilities, and clarify any vague job titles. The new Fair Pay regulations will also have financial implications for companies. Hewitt Associates found that 65% of organizations do not know how the new FLSA legislation will affect their payroll, and 81% said they are unaware of the general administrative costs included with FLSA compliance.
Recognizing and Complying with the New Fair Pay Regulations
While final regulations don’t go into effect until August 23 rd , employers should be using the interim period to ensure classifications and practices will be compliant by the effective date. Employers should not wait until the last minute to resolve the required issues, because mishandling overtime can be very expensive and often has a way of catching up to employers. Employers should consider designing a plan to comply, review and reclassify jobs as needed, remembering to review and update, determine jobs for reclassification, determine pay adjustments and the impact of reclassification, determine “highly compensated employees,” and determine and reflect the impact of the salary changes.
