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Overtime Law 2016: Tracking Time and Attendance for 4 Million Hourly Employees

For better or for worse, the new overtime law has been signed into action. On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s (DOL) final rule updating the overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of […]

For better or for worse, the new overtime law has been signed into action.

On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s (DOL) final rule updating the overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of implementation.

We initially reported on the proposed overtime rule changes in April. The biggest change since then is the overtime salary threshold, which was reduced from the proposed change of $54,440 to $47,476 annually for a full-year worker or $913 a week.

Like any new labor law, there’s a lot to digest. From the key provisions (see details from the DOL below) to the way restaurant operations and managers will track employees’ time and attendance.

As we mentioned in our first blog on the FLSA overtime legislation, restaurants that want to get ahead of the increase should start creating a plan to track each team member’s employee status (i.e. full-time, part-time or variable hour) as well as their time and attendance.

Tracking time and attendance or the actual hours worked will be crucial for two reasons. For one thing, it will make sure salaried employees are properly compensated under the new overtime law. Plus, having an accurate audit of hours and payroll information could become a crucial piece of evidence if a class action lawsuit is brought against the employer.

These are complex rules, numbers and calculations that if managed in spreadsheets or other simpler scheduling tools, could lead to errors and put your operation at risk.

Manage the New Overtime Law with Time & Attendance Tools

Integrate Your Scheduling and Time & Attendance Tools

Are all your scheduling systems talking to each other? Making sure you’re complying with the law is much easier when you can track your employees’ scheduled hours vs. actual hours worked along with all of your time cards, tip adjustments, state and company overtime rules in one central tool.

Manage & Track Overtime Rules

Overtime rules aren’t exactly rocket science but they’re not necessarily the easiest to track either – even when you’re running a lean and mean operation. There are just too many moving parts, pay rates, and people to manage it all in a spreadsheet or any other overly simplified scheduling tool.

The best restaurant management platforms give operators and managers the ability to manage their overtime rates (based on State-specific laws) and set weekly thresholds to help both managers and employees understand when overtime is appropriate and approved or when it should be avoided.

Manage & Track Special Pay Rules

Under the new rule, operators can now count nondiscretionary bonuses (i.e. The employer predetermines the specific criteria that is required to receive a bonus. Employees expect to earn the bonus if they meet the criteria.), incentives, and commissions toward up to 10 percent of the required salary level for the standard exemption, so long as employers pay those amounts on a quarterly or more frequent basis. The Final Rule also allows employers to make a “catch-up” payment at the end of each quarter.

Automatically Track Time & Attendance

With time and attendance software , you can set your default pay period and pay rates by job type. Managers can also add, edit, and terminate employees as well as jobs and pay rates. All of that information can be synced with the point of sale where employees clock-in-and-out and managers can view a report to see who is clocked-in-or-out at any time.

The time and attendance data can also be pulled out of the system to generate regular payroll reports or be synced with popular third-party payroll providers like ADP.

Create Clock-In & Clock Out Rules

Sometimes even your best employees forget to clock out. With time and attendance software, you can set up rules to automatically clock out employees at a certain time each night.

Managers can also set up rules that create a threshold around when employees can clock in to reduce accidental early clock-ins or even those pesky buddy punching or riding the clock situations.

Time and attendance software also give managers tools to do things like:
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    • Time Clock Administration: This allows managers to configure settings for the web clock tool like business hours or other custom settings that are unique to your operation.


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    • Time Clock-In Override: This allows managers to perform various overrides when employees attempt to clock in/out not according to their assigned shifts.


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    • Edit Time and Attendance Data: Each punch record will show, and adjustments can be made to the punch times and job codes. Additionally, managers can input a reason why the change was made. Managers can even send the edits to the time and attendance data to employees for acknowledgement within the system.


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    • Employee Time Card View: Your employees really don’t want to always bug you, they’re just trying to get a hold of information so they know what to expect on their next paycheck. With the employee time card view, you give them a central place to view their time cards at any time wherever there is Internet access.


The DOL Outlines Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative, and Professional workers to be exempt. Specifically, the Final Rule:

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    • Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);


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    • Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and


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    • Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.


Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

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