What Doesn’t Change
“Outside sales” employees are not affected by the revised minimum salary requirements. They can still be paid on commission without a guaranteed salary as long as their duties and work location meet the revised outside sales exemption test requirements found on the DOL’s Web site.
Non-management employees in production, construction and similar occupations like carpenters, electricians, plumbers and laborers are classified as blue-collar workers and are entitled to overtime pay. They are not exempt under the new regulations no matter how skilled they are or how much they earn. “They could possibly qualify for the highly compensated employee exemption,” says David Crump, director of NAHB’s Legal Research Program, “but that’s not very likely.”
Crump offers some tips for classifying superintendents and project managers, who seem to straddle the blue-collar/white-collar line:
- To qualify for overtime pay exemption under the new regulations, these employees must meet salary and duties tests under the executive or the highly compensated employee classifications.
- Required duties for the executive exemption include the power to hire and fire employees or at least weigh in on recommendations about hiring, firing, promotion or advancement.
- The administrative exemption involves office or non-manual work directly related to management or general business operations — a description that normally would not fit a superintendent or project manager with site-specific responsibilities.
What Does This Mean for Your Business?
“I don’t think [the new overtime pay regulations] will have much impact on the average home builder,” says Bob Whitten, vice president of SMA Consulting in Colton, CA, and a member of NAHB’s Single Family Small Volume Builder Committee. “Administrative staff earning less than $23,660 a year are usually paid by the hour and rarely get more than 40 hours per week. Most field labor is contracted, so there is minimal impact there.”
Whitten is right that the regulations probably won’t result in a sea change in home builders’ and remodelers’ operations. However, you should take the following steps recommended by CCH, Inc.’s Health and Human Resources Group to manage payroll costs and make sure you’re in compliance with the new overtime pay regulations:
- Identify employees who earn less than $23,660. Evaluate whether payroll costs will best be controlled by raising their salaries to retain their exempt status (provided they still meet the duties tests for their positions), or budgeting for overtime pay.
- Conduct job analyses. Determine which employees perform administrative, professional and executive duties as defined by the revised duties tests.
Crump points out that the definitions for administrative employee exemption have changed to “more of a position of responsibility.” It’s important to familiarize yourself with the duties tests and, if necessary, ask your lawyer for help in interpreting them. You can also call the DOL’s toll-free Wage and Hour help line Monday through Friday 8 a.m.-5 p.m. at 866-487-9243, or use the online form to ask questions.
“Employers have to be careful of classifications, which they did under the old rules,” says Lucy Katz, vice president of customer service and client development for Austin, TX-based Katz Builders, and a member of NAHB’s Single Family Small Volume Builders Committee. ‘You need to make sure the classification meets the job description. That’s why it’s so important to have written job descriptions.”
- Revise job descriptions. After you perform job analyses, revise job descriptions accordingly. Make sure the descriptions truly reflect the work performed and skills required.
- Work closely with payroll. Make sure your payroll system is updated to accurately reflect exempt and non-exempt classifications, and that overtime is paid accordingly.
- Develop a communications strategy. Some employees may shift from exempt to non-exempt status under the revised rules. They may be happy about the prospect of earning overtime pay, or they may simply feel demoted. You have some pretty sensitive information to give them, so choose your words well. Be sure to communicate to all of your employees how valuable they are to your company.
One More Thing…
- Learn about local laws. Some states have enacted overtime pay laws. When an employee is subject to both the state and overtime laws, he or she is entitled to overtime pay according to the higher standard (that is, rate of pay). The DOL’s Web site includes a map that details minimum wage and overtime pay requirements for specific states.
Whether you’re writing job descriptions for the first time or are revising your current ones, get a copy of "Job Descriptions for the Home Building Industry, Third Edition." It contains 40 job descriptions for home building industry employees, plus sample company organization charts, job description forms, electronic documents on CD and other tools. Order it from BuilderBooks.com by calling 800-223-2665 or click here to order it online.
Run your business better and more profitably!
Just click www.nahb.org/biztools to access hundreds of timesaving, moneymaking and cost-cutting resources. You’ll find guidance in a concise, easy-to-read format on topics like financial management, production, sales and marketing, customer service and human resources … to name just a few! Plus, get answers to your tough questions about how to use software to improve your bottom line in the Talk About Business & IT section.
The NAHB University of Housing Offers Courses on Business Management
The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. For a list of current offerings, click here.
[ Go to Top ]