In May 2016, the Department of Labor raised the minimum salary for employees to be exempt from overtime pay from $23,660 per year ($455 per week) to $47,476 per year ($913 per week). There are other new rules for determining whether an employee is truly exempt as well. The deadline for compliance was December 1, 2016, but it was blocked by an injunction.
The final fate of the changed regulation remains unknown. If it does eventually go through, though, many dental practice owners are still unclear on what they need to do. Here is what you must know about overtime pay, both as it exists now and how it may change under the new law.
The Legalities of Overtime Pay
The relevant statute is the Fair Labor Standards Act, the same act that governs the federal minimum wage, child labor, and other employee rights. The relevant portion of the law determines which employees are not entitled to overtime pay. It was last updated in 2004.
“Exempt” employees are those who are paid a salary above the threshold and meet specific tests. Even if you pay a salary, if it does not meet the minimum of $23,660 (now) or $47,476 (if the new rule takes effect), you must still pay overtime if that employee works more than 40 hours per week (8 hours per day in California).
Assessing Your Staff
With the new rule on the horizon, now is an excellent time to audit your records and ensure that you are in compliance now, and are ready to move into compliance with the new law if needed. First, determine exactly which employees fit the rules for exemption. Besides the salary threshold, employees’ jobs must meet a rigorous set of criteria. Be sure you understand the specific tests that must be met.
In a dental office, the most likely exempt employees are office managers and team leaders. Hygienists, receptionists, and other front-line staff members are rarely, if ever, considered exempt. Business owners, executives, and dentists typically do not fall under overtime rules at all.
Once you know which employees are considered non-exempt, you must make sure that you are properly compensating them. These are your options:
- For an employee you considered exempt who is actually non-exempt: Either increase her salary and change her duties to meet the exemption criteria or accept that she is non-exempt
- Establish a system for tracking non-exempt employees’ time
- Pay non-exempt employees overtime whenever they work more than 40 hours in a workweek (or eight per day in California)
- Consider removing duties or hiring additional staff to limit overtime expenses
It is important to note that a non-exempt employee can NEVER waive her right to overtime or work off the clock. The best way to manage overtime is to create a written notice in the employee handbook that overtime must be authorized, and delineating the penalty for unauthorized overtime. If a non-exempt employee works unauthorized overtime, you must still pay correctly for the overtime hours worked, but you may also impose the designated penalty.
Ready to Get Started?
If you are interested in learning how to take your dental practice to the next level, please contact Ascent Dental Solutions today at 413-224-2659 to learn how Dr. Coughlin can help.