‘FairPay an opportunity to correct personnel policies’

The implementation of the FairPay initiative is a good opportunity for employers to correct personnel policies “without questions,” according to private lawyer Marcia Schultz.

“This is an opportunity to correct policies without raising people’s eyebrows,” she said in a forum Wednesday.

In her presentation before the Society of Human Resource Management, Schultz recommended that employers audit their workplace or review and revise the classification of their employees.

She said employers can convert low-paid supervisory personnel and others earning less than $455 a week and those misclassified employees to non-exempt status.

She said payroll practices should also be reviewed.

“Review sample payroll runs for salary of part-time and other workers and $455 a week threshold. Make sure they are complying with the salary basis test,” she said.

She urged employers to train managers and payroll workers to avoid impermissible deductions.

Schultz also advised employers to review and revise job descriptions: to better describe actual duties and emphasize exempt duties.

“This may not come easy because you have to sit down with your employees [and explain to them the changes and the need for them],” she said.

She said employers also need to revise policies and employee handbooks to comply with the salary basis test, allow disciplinary deductions in full-day increments, and define the workweek.

A revised handbook should distinguish policies for exempt workers from nonexempt, salaried and hourly workers, and add in a “safe harbor” policy to allow correction of improper deductions.

Schultz said that, while the regulations have yet to be implemented and may be subject to changes by the U.S. Congress, “it’s better to start preparing now.”

The U.S. Department of Labor said the newly adopted federal regulations give employers an option to either pay certain workers $455 a week or keep them at their present salary level but give them overtime benefits if they work beyond their work time.

U.S. DOL wage and hour division investigator Richard L. Hamilton said a weekly rate is determined by multiplying the current monthly pay by 12 months and dividing it by 52 weeks. Anything that exceeds 40 hours must be paid overtime which is equivalent to no less than 1.5 times the regular rate.

This is part of the new rules that the U.S. DOL had issued under the part 541 regulation of the Fair Labor Standards Act, which requires the payment of overtime pay to the exempt group of employeesz—executive, administrative, and professional—who receive $23,660 a year and below. The new policy will take effect on Aug. 23, 2004.

Currently, only those employees earning $8,060 annually or less are guaranteed overtime pay.