In a long-awaited announcement this week, the U.S. Department of Labor released new regulations requiring companies to give overtime pay to a whole new group of formerly exempt workers. Under these revisions to the Fair Labor Standards Act, it’s estimated that the rules will lead to time-and-a-half pay for all hours logged over the 40-hour workweek for nearly 5 million additional members of the U.S. workforce.
It will take at least a few more months and a public comment period before the rules, which were announced by President Barack Obama earlier this week, become the law of the land. However, companies already can get a pretty clear concept of what is coming, and should think about preparing now for these potentially major alterations to the way they categorize and compensate employees.
“This is going to impact a lot of employees across the country and basically across all sectors and industries in the United States,” Michael Abcarian, regional managing partner at Fisher & Phillips’ Dallas office, told CorpCounsel.com.
Currently, the DOL only requires companies to give overtime pay to exempt workers if their paychecks are below the threshold of $455 per week, or $23,660 per year. This week’s announcement means that the threshold, if approved in its present form, will be raised to $970 a week, or $50,440 a year, which means companies will be faced with the prospect of handing overtime pay to many more workers.
In outlining the proposed regulations, the White House noted that the regulations haven’t been updated since 2004. The fact sheet contends companies are denying workers overtime by inappropriately trying to fit them into another exemption from the FLSA that applies to those who perform professional, executive or administrative duties, and that since exemption is determined based on both duties and salary range, a higher salary ceiling will correct for this.
According to Abcarian, a smart place for companies to start with these regulatory changes is getting their classification houses in order. Do existing practices for determining who is exempt and nonexempt work? Is every worker in the right category? “The first step is figuring out how to get your pay packages right under the new regulations, because if you’ve got mistakes in what you’re currently doing, you’ve got new mistakes under the new regulations,” said Abcarian.
Then in-house counsel will have to help their companies decide what to do with FLSA-exempt employees who now, for the first time, will be above the overtime threshold. One option, explained Alfred Robinson Jr., a shareholder at Ogletree, Deakins, Nash, Smoak & Stewart, is simply paying exempt workers enough to push them above the $50,440 per year line. However, this can be an expensive proposition.
Another possibility is to go with the changes that the DOL has proposed and reclassify relevant employees as nonexempt. Besides having to ensure that these employees’ job duties fit the DOL standards for nonexempt workers and making certain that they get paid at or above the minimum hourly wage and for overtime, companies also will have to focus on the record-keeping responsibilities associated with nonexempt employees. “Then it will be more of a challenge to manage the hours that these individuals who are reclassified actually work,” Robinson told CorpCounsel.com.
There may be other ways out of the problem too, he noted, including an idea floated by the DOL in its proposed rules that would, in certain circumstances, count nondiscretionary bonuses given on at least a monthly basis as part of employee pay, helping more workers exceed the proposed threshold. The DOL asked for more comments on this idea.
Once companies have decided how to handle the situation, they will need to adjust budgets and other projections accordingly. And what will make that even more difficult is that the proposed regulations index the pay range for overtime exemption to other aspects of the economy, meaning that it will most likely continue to rise and rise as the years go on.
Lee Schreter, co-chairwoman of Littler Mendelson’s wage and hour practice group, told CorpCounsel.com that this could cause big problems for companies. They will not only have to re-evaluate their workforce and corresponding budgeting on a frequent basis, she said, but they will have very little time to make decisions, given that the proposed rules only give companies 60 days between the announcement of a rise in the threshold to correct for it.
“Every time this goes up, employers are going to go through the process of deciding whether they want to raise salaries or convert people to being nonexempt employees,” she noted. “That can be a process that take far longer than 60 days.”
Schreter added that there will be both direct costs to companies as a result of the need to get into compliance with new rules and indirect ones as not every employee is going to take kindly to having their status under the FLSA debated and changed. “It’s a perpetual stirring of the employee relationship pot thanks to the Department of Labor,” she said.
Employers also should note that under the proposed regulations, the DOL plans to raise the annual salaries in the “highly compensated employee” category. The guidance also asks for interested parties to weigh in on whether the FLSA duties test, which is used to evaluate whether a worker’s job description makes them exempt or not, should be changed. This hints at more potential shake-ups ahead in the FLSA.
Fifty percent of the data your company stores probably lacks business, legal and regulatory value. Worse, the total number of an average company’s unstructured data is growing at 60 to 80 percent per year. This data introduces costs and security risks to your IT environment, eats up space in your primary storage and prevents you from making business decisions based on data-driven insights. These issues may seem like inconveniences, but added together, they make dormant data a serious threat to your business and a major obstacle preventing you from transforming data insights into business value.
If this problem sounds familiar, you’re not alone. End users are notorious hoarders when it comes to file versions, disorganized filing systems and sticking with a save-it-all mentality. We can’t blame you for succumbing to the data deluge; the more dormant data you’ve piled up, the more of an undertaking it will be to sift through it, and the more you may begin to fear what lies beneath the surface.
It’s time to stop underestimating the nuisance created by dormant data and start recognizing it as a critical risk that must be addressed. You deserve to know what’s in your data. If you need help getting started, below are some steps that can help get you on track and bring your dark data into the light:
Determine which users are consuming the most space
Highlight which files haven’t been accessed in months, or even years
Locate personal data like hefty music and video files that employees may have saved, even employees who may have since left the company
Neutralize risks by locating and securing sensitive and private data
By leveraging data-aware technology, you can quickly visualize and filter files in order to determine their value. However, meeting these primary goals doesn’t mean your effort is over. Educate your team on best practices that help them understand the value of data and better manage its lifecycle, using strategies such as:
Data retention policies
Data visualization tools
Routine archiving and data governance
When your dormant data is under control, you can better understand your end users’ habits and demographics, reduce your production storage footprint and overhead, and save resources like time and money. Most importantly, however, you can protect your data by addressing security risks before you give them a chance to take root.
"Leading the way and trying something new is how businesses successfully innovate."
Identify goals Every sales operation has different goals. Whether management wants to see a higher volume of revenue per sale, an increase in the number of sales leads or create a more suitable sales compensation plan, figuring out these goals will help a business engineer the proper innovation strategy to meet its objectives.
Create a unique innovation strategy HBR emphasized not every operation has the same needs. Adopting an innovation strategy used by another organization won't necessarily drive the desired results. While management professionals can learn a great deal from other organizations' innovation strategies, attempting to utilize the same one may not be as successful for one company as it is for another.
In addition, it is important to consider whether a new innovation strategy will easily fit with an existing business model or if an operation will need to also adjust its model to accommodate a new strategy.
Consider customers Whether an operation understands its customers determines success. Requesting input or simply becoming more familiar with what individuals want out of an operation can help drive sales productivity. Becoming more attuned to the issues and demands of a customer base can help an operation develop the best innovation strategy for that unique operation.
Investing the time to evaluate the needs of those who purchase products is paramount.
Make it routine By constantly evolving and adapting, businesses can truly excel. The sales landscape is constantly evolving. Customers' needs and employees' motivators can completely change quickly. Continuing to evaluate and tailor a business strategy to those alterations can help improve the chances of an operation reaching its goals and objectives.
By constantly evaluating and looking to innovate and change strategies, businesses can bolster their performance. For example, if a sales team has not been performing as it should, management will likely need to consider both the customer needs as well as the needs of the sales team. If the customer wants a more personalized experience, developing a plan to incentivize salespeople to spend more time with each customer may help improve performance.
Sales incentive compensation can be used to strengthen an operation and increase sales productivity. Identifying exactly how to properly motivate a sales team is key. Management should also be innovative when it comes to compensating sales professionals.
Innovation drives continual growth and success. By considering these four components, an operation can develop its own unique innovation strategy.
The Biggest Data Management Challenge for an IT Director
With great power comes great responsibility, especially when that power is derived from data. Data is a double-edged sword: On one hand, it allows you to preserve potentially valuable information for future use; keep track of past documents, employee and customer interactions; and protect information about the history, development, and organization of your company. On the other hand, data growth rates today can make its maintenance difficult and risky, especially when your employees adopt an “everything is important” attitude toward saving file versions and hoarding data.
The data hoarding mentality refers to the belief that you should never purge your data on the off chance that you’ll need something in the future. Such a mindset produces a well of data that is rarely assessed for relevance or security, resulting in a confusing morass of data with questionable value and high potential risk. When you can’t tell what’s lurking in your dark data, you open yourself up to a slew of security and compliance threats that have the ability to cripple your company’s productivity. As addressed in our latest webinar, “3 Greatest Challenges for Data Management: IT Director’s Perspective,” a compulsive storing mindset can throw obstacles in your company’s path to success that will cause you to redirect and pivot your storage strategies. A webinar I recently hosted with Mark Lamson, director of IT at Westerly Public Schools, and David Stevens, technical marketing manager at DataGravity, tackled this topic, covering how to:
Enhance data complexity and security;
Increase visibility and understanding of your data sets; and
Rein in your data growth and storage utilization.
With 78 percent of data breaches occurring from within an organization, as reported by the Ponemon Institute, it’s becoming abundantly clear that compliance does not always equal security, and that security doesn’t always equal compliance. However, when you better understand how to store and protect data in a way that benefits your company, you can immediately decrease any threats lurking in your dark data.
With the problem of employee retention growing, companies are more likely to rely on performance analytics to better prepare themselves if workers decide to leave their employers, The Wall Street Journal reported. High employee turnover could cost employers thousands, reducing profits and resources to use for existing employees. While there are various reasons why workers would want to leave a company, it's up to employers to determine the cause and react quickly.
Big companies like Wal-Mart are using employee management analytics to determine whether employees are deciding to move on to another employer, according to the Journal. Not only do employers get a better idea of which employees are considering leaving, but they can also identify the source of lower employee retention.
According to LinkedIn, it can cost a company 30 percent to 50 percent of an employee's annual salary to replace an entry-level worker. This percentage is substantially higher for mid-level and high-level employees or workers with special skills. With the high cost of employee turnover, employees should track metrics that could indicate when an employee is close to heading out the door.
Data collection to improve retention The types of data employers can collect include how long workers have been with the company, performance statistics and responses to surveys and personality tests.
Companies that use sales effectiveness metrics and other key performance indicators can gain insight into whether employees are engaged with their jobs and whether there are underlying causes to a drop in productivity. When firms suspect that employees are losing interest in their jobs, they could confirm this through worsening key performance indicators, such as lower sales and when employees are less likely to meet their quotas. Without quantitative data like revenue per sale and other measures, employers are less likely to pick up on subtle signals that employees are ready to leave.
If employers are able to detect employees who are more likely to leave, they can ready themselves to find a replacement to reduce any productivity losses that happen during the recruiting and training process for new employees.
"If we can tell three months in advance [that a position is going to be open], we can start hiring and training people," said Elpida Ormanidou, vice president of global people analytics at Wal-Mart, according to the Journal. "You don't want the jobs vacant for that long a time."