Dealing with the New Overtime Law Changes (2016)

UPDATE: A few weeks after this was written, a federal judge issued an injunction that put a stop to these new rules for now. See a whole article explaining the status here. I will try to get back here and post updates on the issue as it develops.

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By now, I hope you’ve heard of the U.S. Department of Labor’s rule change regarding overtime pay for white collar workers. You’ll be expected to comply with the new laws starting Dec. 1, 2016. So, I wanted to address the topic for anyone who may have missed it.

It used to be that if you paid a white collar worker any more than $23,660 per year, you didn’t have to worry about tracking their time or paying overtime hours. The rules have changed the threshold to $47,476, or $913 per week. That is quite a jump. So, if you pay any of your white collar workers less than that, the law now requires you to pay them overtime (generally understood as time and a half) if they work more than 40 hours a week.

This change might not affect you much, depending on how your facility is structured. Or, it might seem like you need to make some major changes.

Here’s how these changes may affect the most common positions hired at sports facilities.

Front Desk Workers

Most sports facilities have someone on staff who manages the front desk, handling customer service and administrative tasks like answering phones, accepting payments and arranging schedules. You probably already pay most of these workers hourly. Therefore, they already qualify for overtime pay.

It’s generally easy to make sure these folks work less than 40 hours each week. They don’t typically have responsibilities that spill over the facility’s normal hours. Plus, online scheduling software, or even managers or instructors, can handle many administrative tasks.

If you do happen to have a front desk worker who receives a salary under $47,476 and used to be exempt from overtime pay, you’ll now have to keep a record of their hours. Make sure to compensate them accordingly if they go over 40 in a week.

It might be worth switching salaried front desk workers to hourly.  Clock them in and out to make sure proper records are kept. Keep in mind that changing someone to an hourly worker doesn’t require changes to their overall pay, benefits or job titles.

Instructors, Trainers or Coaches

If your instructors are independent contractors, you’re not required to track their work hours. Independent contractors should be operating mostly independently of you, hence their name. (Click here for more on the differences between independent contractors and employees.)

However, if any of your coaches and instructors are salaried employees who make less than $47,476 a year, you may need to make some changes.

The law does exempt some athletic coaches from the new overtime pay requirements. Here’s another article that deals with the topic. However, it seems that the exemption deals mostly with coaches employed by schools. An attorney can probably tell you for sure. Generally, it’s safer to err on the side of assuming your trainers qualify for overtime until you hear otherwise from a legal professional.

That means you’ll need to keep careful records of any non-exempt salaried instructors’ hours and pay them overtime accordingly, just like with front desk workers.

This can be more difficult if your salaried instructors are also in charge of customer relations, sales, class planning or other tasks that are done off-site and outside of their training hours. Those work related tasks will now count as hours worked.

Also, all work-related communications should happen within the 40 hours they’re supposed to work. If that’s not possible, consider restructuring job roles to have your admin or management staff take over some customer relationship tasks.

Sports Facility Managers

Of all of a sports facility’s employees, the ones most likely to be making over the salary threshold for overtime pay are those on the management level.

Managers have the ultimate responsibility to fix things when they go wrong, no matter what time of day or night. They’re the ones who need the most flexibility to work various hours, sometimes more than 40 a week. Of course, they’re also generally the most experienced member of a sports facility staff. Therefore, you probably pay them the most.

The $47,476 threshold is based on the 40th percentile salary in the U.S. region with the lowest average salary.

Bumping a manager’s pay over the threshold might be a good option for some of you. I would’ve had to do some significant job restructuring to be able to afford any overtime-exempt employees at the small Ohio facility I used to own. I probably would have opted to keep a closer eye on time spent and pay a bit of overtime occasionally than make such a big change in salary, at least right away.

Keep in mind that the law allows commissions and other non-discretionary incentive payments to make up to 10% of an employee’s salary, as long as those payments are made at least quarterly.

Any law change like this can seem like just another headache when you’re trying to run a business.

However, I encourage you to see it as an opportunity to really analyze how your employees are spending their time and make some changes that can make your business more efficient.

They will evaluate the overtime threshold every three years from now on to reflect the 40th percentile of salaried workers. So, this dynamic is here to stay.