The Marion City Council discussed the Fair Labor Standards Act overtime exemption for salaried employees at its meeting Nov. 7.
City Administrator Roger Holter said the final rule raises the salary threshold from $455 a week minimum to $913 per week for anyone to have the exemption.
“Like most things coming out of the Department of Labor there are multiple categories within a directive,” he said. “Based on that, 21 states, including Kansas, have filed a lawsuit with the Department of Labor challenging (the overtime final rule).”
The lawsuit hasn’t been placed on a docket yet, he said, so the city will be against the Dec. 1 implementation deadline.
Current salaried supervisors within the city are classified as exempt, Holter said, adding that exempt means those supervisors are not eligible to receive overtime compensatory pay.
“However, as a city, we have long adopted and operated a policy regarding compensatory time in lieu of overtime,” he said.
With the modifications that have occurred, Holter said the council will need to discuss the policy.
“It will need to be tweaked based on which way this governing body wants to implement this,” Holter said.
Four options
Holter reviewed four options available. The first one is to raise salaries for all workers whose salaries are close to the new threshold.
“Employers may choose to raise workers’ salaries and maintain salary status with overtime exemption clauses.” he said.
Should the council choose this option, Holter said the impact would be about a 30 percent increase over current expenditures for salary, which have not been budgeted for 2017.
The second option would be to pay overtime above a salary, he said. It would mean moving salary to hourly.
“Employees can remain on salary, but if compensated at a level below than the threshold, they are eligible for compensatory time.”
Or if they exceed the bank approved, those employees can be paid the overtime at one and a half times what their hourly rate would breakdown to, he added.
“This particular option would then allow the salaried employees that self-directed flexible schedule to hit whatever work demands or is necessary,” Holter said.
The third option suggested would be to evaluate and align employee workloads, which would basically be restructuring the city’s internal supervisory staff to ensure nobody is expected to work more than 40 hours anytime.
The last option, Holter said, is the practice that most aligns with the city.
Supervisors could limit the need for employees to work overtime by ensuring that workloads are distributed to reduce overtime, that staffing levels are appropriate and workers are managing their own time, he said.
According to the labor department, this has actually existed within that department since May, he said, and apparently it has not been distributed on a wide basis.
“Our local policies would need to be modified because we have hourly employees and they have always been able to earn an hour and a half credit,” Holter said.
Last year, he said, the city changed its policy of supervisors earning one and a half hours in compensatory time, but to be in compliance, the city would need to return to every hour over 80 they would be allowed one and a half times.
Recommendation
Holter said his recommendation on an overall basis would be for the city to remain where it is.
“The city modify its compensatory time policy or flex time policy, have that formally documented and signed with each salaried employee, adhering to the labor department requirements,” he said.
Holter added that his concern was that if the city starts moving supervisors who have been challenged to operate their business effectively, it would be counter productive.
“With use of compensatory time and adjustments to the cap levels,” he said, “we still afford that flexibility to our leaders within their teams to ensure they get the task done.”
The council has one more meeting before all the necessary policy adjustments need to be in place.
“I basically wanted to layout what the city’s option are and then policy changes can be made,” Holter said.
