Monday, September 26, 2016

A MUST KNOW---THE NEW OVERTIME PAY RULE

Now---I can hear you thinking---J  “What?  None of my staff members work overtime.  I’ll just skip this blog post since it doesn’t apply to my practice.”  WAIT!!!!!!!

Two true stories from my experience may convince you otherwise:

Story #1:  A 26 year veteran dentist had employed a business desk staff member for almost his entire career.  She seemed indispensable. Their loyalty went both ways---dentist to staff member and vice versa.  Because she often ran out of office hours before running out of work to be done, she frequently took work home with her.  When I was consulting with the office, she commented to me how many hours weekly she spent doing office work at home; and she was glad to do it.  The dentist decided to leave things as they were, ignoring my advice that he owed her overtime pay. 

Take work home?  Fine with her and fine with the dentist---until a remarriage brought her new husband into the mix.  New husband insisted she must receive overtime pay currently and retroactively for all work done at home if total worktime during a week exceeded 40 hours, and it did most weeks.  The outcome?  The State Department of Labor audited the situation, agreed with new husband, and the dentist lost.  He lost in two ways: an experienced valuable staff member left, and he was out mega-bucks by the time it was sorted out and payment made.

Story #2:  A well-intentioned dentist agreed to let a full-time dental assistant who had recently incorporated a cleaning business clean the office after hours and/or on weekends.  The dentist admired the DA’s ingenuity and industriousness.  All seemed well until the dentist mentioned the arrangement to her attorney who insisted the DA must be compensated with overtime pay for all hours worked over 40 per seven day week.  This seemed unlikely to the dentist because the DA was cleaning the office during non-patient hours as the owner of an incorporated cleaning service.  Sure enough, however, after it was all settled, the dentist had to retroactively compensate her DA with overtime pay.  She retained the DA as a staff member, but had to find a new cleaning service.  Both doctor and staff member learned a hard lesson about overtime.

On May 18, 2016, the U.S. Department of Labor (DOL) announced an updated regulation about overtime pay for employees.  Previously only employees with salaries or equivalent hourly wages of $455 or less per week were entitled to overtime pay for all hours worked over 40 in a seven day week.

Under the new regulation, all employees, salaried or hourly, who make $913 or less per week are entitled to overtime pay.  Any employee earning yearly wages, whether salaried or paid hourly, of less than $47,476 must be paid overtime calculated at 1½ times their hourly pay rate for all hours over 40 worked per week.

Suggestion:  make certain no staff member works in any capacity for your practice more than 40 hours per week.  If you choose to let a team member exceed 40 hours’ work per week, check with an attorney well-versed in labor law about that employee’s overtime compensation.


The new rule becomes effective on December 1,2016.  For more information go to www.dol.gov/whd/overtime/final/2016  or  www.dol.gov/whd/overtime_pay.htm

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