The long-awaited U.S. Department of Labor regulations will affect all employers. They are expected to increase the salary basis test to $50,440, the highly compensated employee exemption to at least $122,000, and may require supervisors to spend the majority of their time supervising employees (currently, supervising must merely be their “primary duty”). Still, the impact on the public sector is different for the following reasons:
1. Highly compensated employees who don’t meet the duties test are rare. Occasionally you may hear of a snow-plow driver making more than the governor in some northern climes, but this is because they earned overtime, not because they enjoy a six-figure salary.
2. Under certain circumstances, exempt employees may have their pay docked for not working a 40-hour week. The employer must have a written policy, and the reason must be allowable under the regulations, but provisions exist for protecting taxpayer-funded positions in the public sector.
3. The perception that exemption equals higher status is not as strong in the public sector. It does exist, but employees who earn overtime because they don’t meet the salary-basis test seem to view the extra compensation as a benefit more readily than their private-sector counterparts.
4. If an employee earns overtime, they can be paid in compensatory time instead of money. Employers must provide it at time-and-one-half, there are limits on how much time can be accrued, and any time on the books must be paid out at separation, but it can help control costs. To take advantage of this exception, the employer must have a written policy.
5. Full-time employees who occasionally volunteer to work in another job in another department need not be paid overtime. Be very careful here, because the work must truly be occasional or sporadic, meaning there is no set schedule, and the employee cannot be “voluntold.”
6. Shift-swapping is also allowed. Again, it must be voluntary, and employers must keep records of the original shifts and what was swapped.
7. Those reporting only to the elected official may be exempt. It will depend upon certain factors, and public-sector employers should not forget this important nuance.
Do be sure to tune into MSEC to get the latest on the changes to the DOL regulations. As always, we can help you with any questions you may have during these regulatory changes.