Employers should be starting now to put in place a proactive preparation and compliance plan so that you can successfully comply with latest government regulations. Employers need to become an “expert” on the new overtime rules

Preparation tips

• Identify currently exempt positions or employees whose salaries are in the range between the old CA “white collar” threshold ($41,600) and the new threshold ($47,476). You may need to re-classify many of these employees as non-exempt and therefore overtime-pay eligible.
• Determine which of these positions will qualify for raises above the new threshold and which positions will be reclassified as non-exempt. Beware of the “rising tide effect” of salary increases on existing mid-level salaries and compensation costs, which can be steep.
• Review hours worked by employees re-classified as non-exempt to be able to model compensation impacts of projected overtime costs.
• Develop a communications strategy for employees and a training plan for managers on the new federal rules

Compliance tips

Outline specific compliance scenarios for employees reclassified as non-exempt and therefore eligible for overtime pay under the new rules, which could include:

• Implementing restrictive overtime policies as needed to control overall compensation costs.
• Adjusting schedules where possible to minimize overtime costs, including adopting innovative strategies and technology to maximize scheduling productivity. 
• Shifting certain overtime work now performed by newly non-exempt employees to overtime-exempt employees, part-timers, temporary workers and contractors, if possible.
• Where feasible, hiring more people to limit overtime hours for employees reclassified as non-exempt.