Overtime Laws: What Funeral Home Owners Need to Know

Posted February 22, 2017

5 min read

We sat down with Bryance Metheny, the Chair of Burr & Forman’s Labor and Employment practice, to talk about the overtime law regulations, specifically what funeral directors should know now and in the near future. Metheny advises business owners in developing employment policies and procedures to govern all aspects of the workplace. He also defends employers in litigation in both state and federal courts and administrative agencies. Here’s what we learned during our conversation with him.

The Overtime Rule

As most funeral home owners are aware, the Fair Labor Standards Act (FLSA) overtime rule determines whether employees are eligible or exempt for overtime pay. The salary threshold that would allow employees to earn overtime pay was set to be altered, however that threshold change is now on hold due to a pending lawsuit. (That threshold would have been $47,476 per year, which is twice the prior standard of $23,660 per year, meaning that if employees worked more than 40 hours per week, their salaries would have to be above the new threshold, or they would be eligible for overtime for their additional hours.) According to the US Department of Labor, those proposed changes would have impacted around 4.2 million workers around the country.

While several states and business organizations had filed separate legal challenges to the proposed regulation, in November of 2016—just a week prior to when the new rule was to be implemented—a nationwide preliminary injunction blocked the Department of Labor from implementing the rule.

“A Perfect Storm”

Since many business owners had already made changes in anticipation of the rule change, the timing for the regulations and then the subsequent injunction created a sort of perfect storm of problems for business owners (and for employment lawyers), explains Metheny.

Metheny points out that had the rule taken effect, it would have been almost impossible to unwind it, but even so, the current challenges to the rule have likely damaged the regulations beyond repair.

With the Department of Labor being under new leadership, it’s unlikely that they will attempt to oppose the injunction. The nominated secretary of the Department of Labor is an avid de-regulation advocate who has opposed the minimum-salary threshold increase for exempt employees, adds Metheny.

Metheny says he anticipates there will not be much change from the purely legal standpoint in the near term, suggesting that funeral home owners will not have to do anything differently than what they are doing now in the next year. “What is most likely is that this rule is dead, and that it is almost certainly not going to be implemented in the form that it was proposed. It is unlikely that it will be implemented in any form in the near future—which I would define as this year—and even modifications to it are unlikely in the near future,” he explains. “Whether something does ultimately go into effect that is some variation on the rule that was initially proposed, that’s certainly possible.”

He knows for many businesses that have already taken steps to be compliant, that’s not necessarily positive news. Businesses have suffered from the same problem: “If they’ve already told people that [they are] going to implement these changes in a way that is viewed as positive to those employees, then it is very tough to back away from that,” says Metheny, who says he’s seeing that with many of his clients.

Steps to Take Despite the Uncertainty

Metheny has several recommendations for funeral home owners so they can better manage some of the uncertainty that exists right now.

First, take the opportunity to evaluate your workforce to determine whether its exempt classifications accurately and efficiently support your funeral home. “All business owners can take a look at their workforce to determine whether they have employees misclassified,” says Metheny.

Be sure to see whether individual employees satisfy the current duties tests for exempt status, and whether or not impacted employees do actually work overtime. If you haven’t already, take steps to determine what compensation method is going to be the most efficient for your administrative personnel to avoid mistakes and confusion, adds Metheny.

Many small business owners misunderstand how overtime regulations may impact their business just because they don’t have access to resources within their organization, says Metheny. But now is the time to examine and evaluate these areas.

“Independent of the minimum salary threshold issues, you now have some breathing room created by the injunction. For example, is there anybody that I’m paying improperly based on the duties test that I can fix right now?” When appropriate, consider consulting with an experienced lawyer (or another HR professional) who specializes in labor and employment law for guidance.

Don’t forget to communicate along the way to your staff, says Metheny, who recognizes that morale can also be an issue right now since many employees are well aware of the regulations. “In a general sense, the most effective approach is a simple and direct message that the company is committed to compliance with all employment laws, and that you will continue to monitor instructions from both the judge who enjoined the rules and the federal agency that has jurisdiction over them.”

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About Bryance Metheny

Bryance Metheny is a partner and chair of the Labor and Employment practice group at Burr & Forman (Birmingham, Ala.). He represents employers and managers in all aspects of labor and employment law, and he defends employers in litigation in both state and federal courts and before state and federal administrative agencies. He may be reached at (205) 458-5178 or by email at bmetheny@burr.com.

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