The overtime eligibility requirements have changed—again!
The final rule, as outlined by the U.S. Department of Labor (DoL), aims to extend overtime protections to more lower-paid salaried workers. It’s estimated that an additional 4 million non-exempt employees will be eligible for overtime in the United States.
Starting July 1, 2024, most salaried workers earning less than $844 per week will be eligible for overtime pay. This threshold will increase to $1,128 per week on January 1, 2025. Additionally, the total annual compensation requirement for highly compensated employees will rise to $132,964 on July 1, 2024, and to $151,164 on January 1, 2025.
These overtime eligibility requirements thresholds will be updated every three years starting July 1, 2027.
The Financial Implications
These changes will significantly impact organizations, particularly those that rely heavily on lower-paid salaried employees. Traditionally, many companies have filled demanding roles with salaried employees who do not receive overtime pay, thus avoiding the costs associated with hourly wages and overtime. With the new thresholds, more employees will qualify for overtime, increasing labor costs for employers.
Moreover, companies may face additional administrative burdens, such as the need to track and manage overtime more meticulously—for more people. This can result in increased expenditures on payroll systems, compliance management, and training for HR staff to navigate the new regulations. The cumulative effect of these changes could challenge the financial stability of organizations, especially smaller businesses that operate with tighter margins.
Control Costs With Smarter Scheduling
The financial impact of these changes extends beyond just increased payroll expenses. Companies will need to rethink how they schedule their workforce to avoid excessive overtime costs. This could mean more strategic planning and a shift in how work is distributed among employees. Organizations may need to hire additional staff or adjust workloads to ensure that overtime hours are minimized.
An automated scheduling solution like Indeavor can be instrumental in helping organizations navigate these changes and manage costs effectively. Indeavor’s advanced scheduling software offers several benefits that can alleviate the financial burden of the new overtime thresholds:
Indeavor uses algorithms to ensure that employees are scheduled in the most efficient manner possible. This minimizes the need for unnecessary (and therefore unbudgeted) overtime by distributing work evenly across the available staff. When overtime is necessary, union contracts normally stipulate that overtime hours are offered to eligible employees, and the platform ensures fair OT distribution. This prevents overburdening specific employees and promotes a more fair, balanced workload.
Compliance Assurance
The platform helps ensure compliance with labor laws by letting you pre-define (and change) overtime threshold rules. This reduces the risk of legal issues and fines associated with non-compliance—at the point of scheduling. By providing real-time insights into scheduling and labor costs, Indeavor allows managers to make informed decisions that can help control and reduce expenses without sacrificing adherence.
Employee Satisfaction
In the same vein as the DoL, the Federal Trade Commission (FTC) issued its own final rule banning non-competes. Existing non-competes for the vast majority of workers will no longer be enforceable after September 4, 2024. According to the FTC, nearly one in five Americans are subject to a non-compete; that’s 30 million workers.
Now more than ever is the time to ensure that your valuable workers are satisfied… or else they’ll work for your competitors. Having a process that ensures the fair distribution of overtime is one way to reduce turnover. Proper scheduling improves employee satisfaction by preventing burnout while giving them opportunities to earn more. Happy employees are more productive and less likely to leave.
And turnover comes at a high cost. Gallup estimates that the replacement of leaders and managers costs around 200% of their salary. Replacing professionals in technical roles costs 80% of their salary while frontline employees cost 40%. This includes direct costs such as hiring and training new employees, as well as indirect costs like lost productivity and the impact on team morale.
Manage Overtime Eligibility Requirements With Indeavor
Indeavor’s advanced scheduling capabilities provide the tools needed to optimize workforce management, ensure compliance, and control labor costs, ultimately supporting a more efficient and productive workplace.
Indeavor’s comprehensive suite of scheduling tools not only helps organizations navigate the new overtime eligibility requirements but also ensures they do so efficiently and cost-effectively. By automating and optimizing workforce scheduling, Indeavor reduces the administrative burden and financial impact of these changes, while promoting employee satisfaction and compliance. Our solution is designed to help your business adapt to evolving regulations, minimize costs, and maintain a productive and happy workforce.
