Using the FLSA Ruling to Bolster HR Credibility

The new FLSA overtime ruling has created quite a buzz amongst HR media circles, and with good reason. Not only does it impact HR professionals on a compliance level, but it impacts the company as a whole and as some argue, has the potential to send ripples big enough to disrupt our nation's economy. Regardless of where you stand in terms of whether or not it will help bolster the workforce, I'd like to make the focus of this post more about how to critically assess this information and present a case to your executive team relative to the new FLSA laws. Yes, we're going to use this situation as an opportunity for you to enhance your strategic credibility since it's the perfect complement to another one of my most recent strategic posts. Because, well…when life hands you lemons and all that…

FLSA Overview

First, here's a little background for those who may be unfamiliar with the latest FLSA announcement: the Fair Labor Standards Act (FLSA) is a ruling that was finalized a few weeks ago that increases the minimum pay standards for employees whom are eligible for overtime pay. The minimum salary for eligible employees is $47,476 which is about double the former cap standards for overtime pay and the standards are applicable for all employees regardless of their status (manager, professional, etc.). Obviously, such a drastic change in terms of overtime pay standards has a lot of potential to shake things up for employment in this country. Additionally, these changes must be in full effect come December 2016. For a more in depth look at the possible repercussions of this decision, check out SHRM's FLSA page or FLSA's fact page on the Department of Labor's website. SHRM also noted that an in depth presentation about the latest changes will be addressed at their annual conference next month.

New FLSA Ruling Equals New Opportunities for HR Business Strategy

Okay, I realize that when you originally see a topic about compliance your first thought isn't "Oh great, can't wait to use this to increase my strategic value to the company" because both HR professionals and the C-suite view these items as mutually exclusive, but that's exactly the reason why HR struggles to promote itself as a strategic force and why it often is labeled as a little compliant obsessed. The way I see it, this is the perfect opportunity to marry compliance and strategy because the bridge here is money and money is the language of business.

This is the perfect opportunity to marry compliance and strategy because the bridge here is money.

Enough about the why's though, let's jump directly into the how's. The first thing you're going to want to determine is what makes more sense for your company financially with these new FLSA guidelines and a great tool for determining this is through ADP's site. They have a calculator that is designed to help you distinguish whether it makes more sense to hire more, or pay your current employees more based on the new minimum overtime qualifications.

After you've narrowed down some basic employment cost logistics, you're going to want to assess the financial needs of your company as a whole. This can be a bit tricky without a business background, but the key is to figure out where your company is in its life cycle. Is your company a startup on a bootstrap budget or do you have a handful of investors? Are you a more established company that cares less about profit and more about revenue? If any or all of these questions sound like Greek to you, then ask someone who is directly involved with business development at your company. If that feels too intimidating, you can attempt to do some research on your own, but your best bet is always talking to your resident company expert about it because they can help convey the information in words that you understand. Plus, it helps you better engage with other departments (and your organization as a whole).

First thing you want to do, is determine what makes more sense for yoru company financially with the new FLSA guidelines.

After completing this last step, you're ready to tie the information you've gleaned from ADP's FLSA calculator to your own business model. The easiest way to do this is to make connections between the type of company you are and wherein it places its value, and the money that will be spent on potential overtime employees or new hires. For instance, if your company is a bootstrap startup, it will likely benefit you to hire more employees (since you're expanding quickly and also a newer company; also, turnover costs may not yet be an issue), so you can save on the overtime costs of over-working current employees that fit within the designated FLSA range. Of course, this is largely dependent on the numbers determined by the calculator, but I wanted it to serve as an example for making strategic connections (and presenting them to your boss).

You can also use the FLSA ruling to bridge the costs of buying tools that will help you hire more efficiently like an applicant tracking system because it can help curb spending frivolously and unnecessarily on overworking current employees. The cost of the hiring software helps you to hire more employees faster and more effectively which saves you from being trapped in a situation where paying current employees for overtime is the only option.

Not sure how to determine where your company stands relative to the new FLSA ruling? Our hiring experts can help! Call us today for a free consultation.