Community pools and beaches are popular spots to beat the summer heat. Depending on where you live, there are only a few months to take advantage of these destinations before the harsh cold reality of winter sets in.
Similarly, the recent passing of new overtime rules by the U.S. Department of Labor allows employers only a few months to review their current staffing models, and re-classify non-exempt and exempt workers, as needed. Under the new rules, employees who meet the standard duties test and salary basis test, and earn more than $47,476 annually, are exempt from overtime pay (the former threshold was $23,660).
This instantly makes millions of workers who had previously been exempt now eligible for overtime. Once employers decide their plan of action they must communicate changes to their workforce before the rules take effect on Dec. 1, 2016.
With a rush to make classification changes and ensure compliance, employers would be remiss not to take a moment and evaluate their total compensation packages and potential impact of these changes on their human capital strategy.
For example, employers should examine how their updated pay classifications for various employees will affect those workers’ access to — or contribution levels for — health care insurance coverage, life insurance, a retirement savings plan, vacation time accruals and more. Moving employees from an exempt status to a non-exempt status will likely impact the level of benefits for which many of these employees qualify. In addition, the costs associated with those benefits could also significantly change for both employees and employers.
A trusted adviser like an employee benefits broker is quickly becoming the resource to help employers assess, define and deliver the right combination of solutions, strategy, technology and change management to ensure compliance and preserve the human capital experience that drives business results.
With benefits being a significant factor in total compensation and historically one of the biggest factors in attracting talent, employee benefits brokers are already experiencing client requests for help navigating the new overtime pay rules and communicating changes to employees. Many broker firms are extending the support they provide to their clients in all areas of human capital management as their clients continue to face more and more change in all things regarding their people.
With open enrollment season kicking off this fall — just weeks before the new overtime pay rules go into effect — now is the time for benefits brokers to help clients begin (or continue) preparing a strategy to roll out updated benefits plans and revised policy manuals.
According to the 2016 ADP Health Benefits Report, which examines the current benefits trends of large employers, the cost of health premiums is directly correlated with employee earnings — particularly when it comes to covering dependents. That suggests that both employers and employees will take a close look at how significantly benefits costs will change once employers implement increases or decreases in pay grades across their organizations.
This issue has the potential to open a floodgate of questions and even an emotionally charged response from employees. A recent SHRM study shows that benefits are still a key part of engaging employees, retaining talent and attracting new employees.
Sixty percent of the SHRM study respondents rated overall benefits as a very important factor in their job satisfaction. Just ahead of benefits were overall compensation and pay (63%) and respectful treatment in the workplace (67%).
It’s not surprising that compensation changes and benefits options are two of the most important and challenging workforce issues facing employers right now. Benefits brokers are in a pivotal position to offer strategic counsel to their clients, including best practices for approaching and managing payroll changes and the potential implications to benefits plans stemming from those changes. Below are three steps to consider taking to help prepare for the impact of the new overtime rules:
- Send a timely, personalized note to clients to offer benefits planning support in light of the upcoming open enrollment season and new overtime rules compliance deadline. Outline your expertise and the type of support you can offer.
- Create and offer a free FLSA/benefits guidebook to help employers assess their current benefits options and evaluate potential plan changes they’ll want to consider based on re-classifying exempt and non-exempt workers. Offer scenario planning assistance since the situation will vary for every client.
- Host a series of webinars in partnership with a human capital management expert to arm employers with a broad base of expert insights ranging from benefits planning and integrated HR/benefits solutions to payroll and tax compliance strategies.
Originally published on BenefitsPro. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
