2020 is here, and overtime just got more expensive for employers. A wave of new wage and hour laws—many which became effective January 1, some which take effect later this year—have made more workers eligible for overtime pay nationwide, while increasing minimum wages in many areas. Fortunately, there are steps employers can take to limit overtime exposure, and that includes utilizing features of their scheduling software they may have overlooked.
For employers that manage an hourly workforce, it’s critical to know these new wage and hour laws—and how to best leverage their scheduling software to avoid incurring additional overtime costs as a result of them.
2020 Laws that Impact Employers’ Overtime Costs
It’s especially challenging for employers to keep up with 2020 wage and hour legislation, because new laws have been enacted on the federal, state, and local levels—including these:
New FLSA Overtime Rule – You’re undoubtedly familiar with the latest update to the Fair Labor Standards Act, which increased the overtime salary threshold for exempt employees from $455 per week to $684 per week on January 1. It’s estimated than an additional 1.3 million American workers will be eligible for overtime pay as a result. (Of course, California and New York already have higher salary threshold laws, Washington’s new law goes into effect on July 1, and other states are considering similar legislation.)
New Minimum Wage Laws – More than 20 states and 26 cities and counties across the U.S. increased minimum wages on January 1,affecting more than half the U.S. population. When these employees work overtime, it will now cost their employers more. On an aggregate level, it marks the greatest “raise” in U.S. history. Furthermore, some states are phasing in incremental increases that will ultimately result in a $15 per hour minimum wage.
California’s Reclassification of Gig Workers - California’s new worker classification law, effective January 1, makes it harder for employers to classify workers as independent contractors. Thousands of gig workers have been reclassified as W-2 employees, which means they are eligible for overtime. New Jersey and New York are considering similar laws.
Clearly, failing to pay workers properly for overtime can be incredibly expensive. While wage and hour lawsuits may be down overall, they are still wreaking havoc for employers. For example, McDonald’s recently agreed to a $26 million dollar overtime settlement, while the Centers for Disease Control settled an $11 million class action lawsuit. Why not minimize your overtime risk in the first place?
Four Scheduling Tricks for Managing Overtime
One of the great advantages of cutting-edge HR software is that it helps employers reduce labor costs. Assuming you’re already using advanced scheduling software, implementing these four strategies can help you minimize planned and unplanned overtime.
- Activate Your Real-time OT Alert: Some scheduling software allows you to create overtime flags and alerts, which are triggered as schedules are created. In other words, should a manager schedule inadvertent overtime for a particular worker, the system notifies that manager instantly, so her/she can tweak the schedule before it’s posted.
- Allow Open Shift Bidding: Some scheduling software also allows managers to post open shifts (either via an online portal or on the time clocks themselves), so eligible workers can volunteer to fill them. Not only do workers love this feature, but it allows managers to fill open slots without resorting to intentional overtime.
- Schedule Automated Meal Breaks: Meal breaks are notoriously tricky for employers. While some workers take overly-long breaks, others fail to take full breaks. If workers routinely punch back in early, it can add up to overtime by the week’s end (not to mention compliance violations). Some scheduling software—working in conjunction with the employer’s time clocks—can thwart this. The time clock won’t allow workers to punch back in until their full break is over, preventing potential abuse.
- Utilize Workforce Management Analytics: Wouldn’t it be great if you could simply view a report or dashboard that reveals where your overtime is occurring, right down to the worksite, shift, and manager? Scheduling software that’s part of a robust workforce management solution puts this information right at your fingertips. If you want to reduce overtime costs and track each shift or worksite’s progress, analytics are the answer.
“But My Scheduling Software Won’t Do That…”
So, you’ve scoured your scheduling software, and it just doesn’t offer these features. Now what? Well, if you’re managing an hourly workforce, and if reducing overtime is a priority for you this year, your best solution is to find scheduling software that does—like EPAY’s.
EPAY’s advanced workforce management system is the only one designed for employers with an hourly workforce—and it helps reduce overtime costs and other labor costs, too. In fact, it’s saving our clients an average of 8% per year! See how—watch our video short.