What the New Overtime Rule Means for Funeral Homes

Posted February 12, 2020

4 min read

As you may know, in March of 2019, the U.S. Department of Labor (DOL) announced a potential new rule that would change how overtime is calculated for millions of workers.

That overtime rule that went into effect in January. Are you aware of what the new rule might mean for your funeral home? Keep reading to learn what the revised overtime rule will mean and the steps you should take.

Overtime Rules: Background History

The Fair Labor Standards Act (FLSA) is a guideline that employers today must follow to see whether or not employees are able to earn overtime.

Since overtime is time and a half on what an employee normally makes in a 40-hour work week, it’s important for funeral homes to able to know what kind of workers will or will not be eligible to get overtime pay.

The FLSA Salary Threshold of the Past

In years past, employees with an annual salary below $23,660 had to be paid overtime if they work more than 40 hours per week.

That salary guideline, however, was set back in 2004, and as many have argued, that guideline is out of date. Salaried workers are now eligible for additional compensation based on the nature of the job and duties performed on the job.

The New FLSA Salary Threshold

The new rule—which went into effect at the start of this year—bumps up that salary cutoff to $35,568 per year for a full-time worker, or the equivalent of $684 per week. Above that salary level, the eligibility for overtime will vary based on job duties.

Knowing What the New Overtime Rule Means for Your Funeral Home

Certain classifications of workers are not part of the new overtime change. The new rule makes a number of previously exempt employees now classified as nonexempt —or at least it could, depending on the action your funeral home wants to take.

So how do you determine which of your employees are exempt with the new rule? And what might the changes mean in your funeral home?

Although you will want to research how the law applies to your specific situation, you can test if you have employees who meet these three requirements:

  • The employee is paid on a salary basis (as opposed to an hourly worker paid hourly wages)
  • They earn at least the $35,568—that is, the new salary threshold (starting as of 2020)
  • They have executive, administrative, or professional job duties. If you are unclear on this classification, be sure to learn more about what the DOL sees as “high-level job responsibilities that qualify for exemption”.

Keep in mind another part of the new rule is that employers can now use nondiscretionary bonus compensation and incentive payments to pay as much as 10% of the new exempt salary threshold. This means that incentive income can count towards hitting the new threshold.

Action Steps You Can Take

When looking at exempt employees’ salaries, see if their annual salary is more than $35,568. If it is, you don’t need to do anything further. If the (formerly) exempt employees’ salary is below that cutoff, you have several options:

  • Increase their salary so it goes beyond the new, higher threshold (if you want them to remain exempt) or begin to pay them overtime wages.
  • Explain the difference between exempt and nonexempt employee status and be prepared that they may not like the idea of becoming a non-exempt employee.
  • Consider sharing this information in multiple formats, such as both written and verbal communication, to make sure all staff are well informed and educated on the changes.

It may feel like a lot of work to do up-front, but the change to your structure can pay-off and save your firm a great deal of money or headaches in the long-run. Once again, you want to be sure any new plan or policy impacting the amount of overtime that’s allowed is fully explained and communicated to staff.

Click here to read and further interpret the DOL’s rule on overtime pay requirements for executive, administrative, professional, outside sales, and computer employees.

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