PACCASpecialIssue:Employers&Employees
NewDepartmentofLaborRuleonOvertime
WillImpactChildCare
ThisweektheDepartmentofLabor(DOL)issueditsfinalruleupdatingtheFairLaborStandardsAct(FLSA)
overtimeregulationsforthosefulltime,salariedemployeesearning$913orlessaweek($47,476annually).
UnlessCongressintervenes,therulewillgointoeffectDecember1,2016.TheDOLwillalsoautomaticallyupdate
thestandardsalaryandcompensationlevelsevery3yearsgoingforward.Basedonprojectionsofwagegrowth,
thethresholdshouldrisetoover$51,000byJanuary1,2020,whichwillbethedateofthefirstincrease.
Thenewruledoesnotapplytohourlyworkers,whoalreadymustbepaidovertimeforworkingmorethan40
hoursperweek.Also,itdoesnotapplytosalariedworkerswhodonotmeetthe"white-collar"overtime
exemption(executive,administrativeorprofessionals)becausetheyshouldalreadybepaidovertimeiftheywork
morethan40hoursaweekevenifclassifiedasexempt.
Thenewrule'simpactonPennsylvania'schildcareproviderswillvary,butwillmostlikelyimpactDirectorsand
otheradministrativeandsupervisorystaffthatarenowclassifiedasfull-time,exempt(salaried),butarepaidless
thanthenewminimumthreshold.AccordingtotheBureauofLaborStatisticstheMedianWageforPennsylvania
childcaredirectorsasofMay2015was$42,490,nearly$5,000lessthanthenewthreshold.
Employerswillbeabletocountnondiscretionarybonusesandincentivepaymentstowardasmuchas10percent
ofthesalarythreshold.However,inordertocount,thesepaymentsmustbepaidonaquarterlyormorefrequent
basis.Asaresult,itisunlikelytheSTARSEducation&Retentionbonusescouldbeappliedtotheannualsalary
minimumduetothevariablenatureoftheawards.
TheDOL,Wage&HourDivision(WHD)conductsauditsofbusinessestoassurecompliancewiththeFLSA.In
additiontorespondingtocomplaints,WHDselectscertaintypesofbusinessesorindustriesforinvestigation.The
WHDdoestargetlow-wageindustries,forexample,becauseofthehighratesofviolationsoregregiousviolations,
theiremploymentofvulnerableworkers,orrapidchangesinanindustrysuchasgrowthordecline.Occasionally,a
numberofbusinessesinaspecificgeographicareawillbeexamined.Pennsylvaniachildcareprogramshavebeen
auditedinthepast.
Organizationsprovidingchildcareservicesshouldlooknowathowthenewrulecouldimpacttheirbusinesses.
►Howmanyofyourcurrentlysalaried/exemptemployeesmakelessthan$913perweekor$47,476peryear?
►Howmany"real"hoursdoyouoryourexemptemployeesworkeachweek?Don'tforgettoinclude
professionaldevelopmenttakenoutsideofbusinesshours,aswellasclassroomplanning,emailcheckingand
phonecalls.
►Whatapproachwillyoutakeinsettingnonexemptpayratesforemployeescurrentlyexempt?Willyou
simplydividethecurrentweeklysalaryby40;orlowerthehourlyratetoaccountforthepossibilityof
overtimecompensation?Orincreasesalariesaboutthe$47,476annualthresholdsotheymay"retain"their
exemptstatus?
►Howwillthenewrulesimpactyourbudget,notonlytheimmediateroll-out,butalsofutureyearsasaresult
DOLthresholdincreaseseverythreeyears?
►Howwillyoumakesurethatformerlyexemptemployeesproperlytracktheirworktime,donotworkover
lunch,donotusetheircellphonesforbusinesswhentheyarenotscheduledtowork,etc.
WhatareourOptions:IncreaseSalaryorPayOvertime?
Ifstaffsalariesarebelowthenewthresholdof$913perweek/$47,476annually,employershavethreeprimaryoptions--
requireandensurethatstaffdonotworkmorethan40hours;increasesalariesabovethenewthreshold;orpayovertimeto
thosestaffwhosesalariesarebelowthethresholdwhenovertimeoccurs.Belowaresomeoptionexamples:
NOTE:PACCAisusingtheabovesalariesasexamplesonlyforthepurposeofthisarticleandnotasrecommendedlevelsof
compensation.
ADirector'ssalaryis$45,000peryear.Onaveragesheworks50hoursaweekinthecenterandanother5hoursaweekinthe
eveningandonweekends.Becausehersalaryisbelowtheminimumthreshold,heremployer'soptionsincluderequireshenot
workmorethan40hoursperweek,increasehersalaryabovethethreshold(cost$2,477–notincludingincreasesintaxes),or
payherovertimeforthosehoursabove40(cost$16,875notincludingincreasesintaxes).
AnAssistantDirector'sannualsalaryis$32,500peryear.Sheworks45hoursperweekinthecenterandanother5hoursaweek
intheeveningandonweekends.Becausehersalaryisbelowtheminimumthreshold,heremployer'soptionsincluderequire
shenotworkmorethan40hoursperweek,increasehersalaryabovethethreshold(cost$14,977–notincludingincreasesin
taxes),orpayherovertimeforthosehoursabove40(cost$8,125notincludingincreasesintaxes).
TheCurriculumSpecialist'ssalaryis$41,000year.Sheworksaregular40-hourweek,butspendsatleastanadditionalhourin
theeveningdoingresearchonlineandpreparingcurriculumsupplements.Becausehersalaryisbelowtheminimumthreshold,
heremployer'soptionsincluderequireshenotworkmorethan40hoursperweek,increasehersalaryabovethethreshold(cost
$6,477–-notincludingincreasesintaxes),orpayherovertimeforthosehoursabove40(cost$5,125–n/iincreasesintaxes).
TheEarlyChildhoodDirectorearns$39,500ayearandtypicallyworksa40hourweek,butspendsanadditionalhoureachday
makingfollow-upcallsanddoingpaperworkintheevening.Becausehissalaryisbelowtheminimumthreshold,hisemployer's
optionsincluderequirehenotworkmorethan40hoursperweek,increasehissalaryabovethethreshold(cost$7,977–-not
includingincreasesintaxes),orpayhimovertimeforthosehoursabove40(cost$4,938--notincludingincreasesintaxes).
PayingStaffforAttendingTraining
TheDOLrulechangesshouldalsoraiseredflagsforemployerswhoarenotcomplyingwiththeFLSArulearoundstafftraining.
Attendanceatlectures,meetings,trainingprogramsandsimilaractivitiesareviewedasworkingtimeunlessALLofthefollowing
criteriaaremet:
•
►Attendanceisoutsideoftheemployee’sregularworkinghours;
►Attendanceisinfactvoluntary;
►Thecourse,lecture,ormeetingisnotdirectlyrelatedtotheemployee’sjob;and
►Theemployeedoesnotperformanyproductiveworkduringsuchattendance.
Whetherhavingstaffattendtrainingtomeettheminimumtrainingrequirementsforcertificationorthemorerobusttraining
requirementsforKeystoneSTARS,employersmustcounttimeintrainingasworkinghours.Thisappliestobothin-personand
onlinetraining.Staffmustbecompensatedfortheirtime.Iftimespentintrainingincreasestheirworkhourstoover40hoursin
aweek,staffareentitledtoovertimepay.FormoreinformationvisitDOL'sWageandHourDivisionWebsite:
http://www.wagehour.dol.govand/orcalltheirtoll-freeinformationandhelpline,available8a.m.to5p.m.at1-866-4USWAGE
(1-866-487-9243).