If President Obama has his way, many more formerly exempt employees will be eligible for overtime pay starting next year. And if you’re responsible for employee training, the new reality will have an impact on you.
Under new rules the president announced this week, the pay ceiling above which you don’t have to pay white collar workers overtime will more than double, from $23,660/year to $50,440. That sounds like a big jump, and it is, but the White House points out that because the ceiling hadn’t been raised since 1975, all the adjustment is doing is bringing the figure into line with inflation.
An estimated 5 million so-called white-collar employees who aren’t now eligible for overtime, because they earn too much, will thus be swept into the overtime net. It’s possible that Congressional or court action by opponents could delay or even bar the new rules, but a smart employer isn’t going to count on that.
So what does all this have to do with training? Well, depending on how the the training is organized, and when it is held, employees’ training hours may count as work time. This means that if the training comes on top of a 40-hour week, the trainees are eligible for time-and-a-half pay, under the Fair Labor Standards Act (FLSA).
Points to remember
Here are a few points you’ll want to keep in mind about training and overtime. (Full disclosure: Nothing in the following Labor Department regs has changed; it’s just that they’re even more important now.):
- If the training is held during normal work hours, and the trainees aren’t obliged to work extra hours to make up the work they missed during training, no overtime is due.
- If the training is held outside normal work hours, employees may have to be paid for the time — or they may not. It depends whether:
1) It is voluntary. If employees are free to attend or not attend the training, it’s not work time. (Although be careful: If you put discreet pressure on people to attend, by suggesting that those who do will receive favorable treatment, for example, you’re probably turning the training into work time.)
2) It is directly related, or not, to the employee’s current job. If the aim of the training is to enhance employees’ skills in their existing job, the training time is work time. If, on the other hand, the goal is to help the employee gain new skills in order to be qualified for promotion or other new opportunities, the training time is probably not work time.
3) It involves any work of benefit to the employer. Trainees must do no other work during the training. If the latter involves, say, demonstration or sample work that may afterwards be used in some way by the employer, the training time is compensable as work.
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