In November 2016, the Obama administration's new overtime pay rules—which would have raised the salary threshold for exemption from $23,660 to $47,476—were halted by a federal court decision.
However, with a new administration in place, the possible raising of the salary threshold exemption has not gone away. The final decision on this ruling is still pending, with President Donald Trump's nominee for labor secretary Alexander Acosta still to confirm if he would appeal the decision to halt the law, meaning US businesses need to keep it top of mind.
Should this law come into effect, there are two options for businesses and how they handle these new regulations: either they bump up a worker's salary to more than the minimum threshold, or they start paying overtime to anyone who earns less than this threshold but works more than 40 a week.
The overtime regulations would also raise the annual compensation required for employees who are ineligible for overtime no matter how many hours they work from $100,000 to $122,148.
If you need more explanation about the reasons and effects, check out this useful video from the US Department of Labor. It's important to note that this law applies to salaried employees (not hourly) who perform "white collar" tasks.
While the salary threshold rise would be welcome news for employees across the US, it means that businesses will have to better track the hours employees work and improve planning and scheduling to ensure they aren't paying overtime unnecessarily. They also need link up their payroll to ensure this overtime is paid correctly.
This may sound like a lot of work - especially if you're a solo outfit or small business where one person takes care of all of the above responsibilities - but HR and workforce management software can help you automate many of the associated tasks, ensuring that you comply to this new law, and also taking the pain out of managing overtime.
Here are our pick of the top HR apps for managing the new overtime rules. To provide the best coverage of potential HR apps for managing overtime, we've split them up into two sections. The first is taken from our workforce management category leader ranking, and the second is based on user reviews and opinions.
In a great example of delivering the features that customers ask for, Deputy introduced (for U.S. customers) a new feature to help businesses comply with the new overtime regulations.
The software now comes with a Pay Rates type which matches the basic overtime rule for hourly paid workers. This will be set as the default Pay Rate for new U.S. users, while existing users can update their Pay Rate from within the app.
"Businesses will need to ensure compliance under the Fair Labor Standards Act (FLSA) by tracking the hours for employees earning less than $47,476," said Jason Walker, president of Deputy. "Deputy helps because employees can clock in and out for work straight from their smartphones from our innovative iOS and Android apps where we also track GPS location. Additionally, customers can leverage Deputy Kiosk, our iPad app solution that is used as a shared device for all employees at a particular location and leverages facial detection technology. Both solutions allow businesses to capture the hours necessary to stay compliant with the new regulations."
Zoho People's attendance module is designed to help employees clock in or out manually or by integrating the app with a company's biometric system. The module allows organizations to fix working hours and set rules based on these hours.
Indupriya Choudary, product marketer at Zoho People, explains: "Overtime is no longer a hassle for companies as the extra hours clocked by employees are calculated and tagged as overtime hours. Organizations can select from two styles or modes of working. The strict mode mandates that an employee works for fixed hours (e.g. 8 hours) a day, while the lenient mode doesn't follow stipulated timings. Overtime calculation is based on the number of working hours you select when choosing either of the modes. Organizations have the additional benefit of fixing a maximum number of employee overtime hours per day.
"There is also an extension called "maximum hours", which is an advantage for organizations that want the flexibility of allowing individuals to extend working time while ensuring there's a limit on the number of overtime hours per day. The data for overtime is covered in the attendance reports. The reports can be exported to a spreadsheet so you can use the data for other functions like payroll calculations.
"If your organization's policy stipulates that weekends or holidays be considered as extra working hours, you can use the TOIL (time off in lieu) system. Weekend check-ins are automatically converted to TOIL, which you can consider as your 'overtime hours'."
Workforce management app Planday is a more collaborative way to employee scheduling that lets managers give more autonomy to their employers to create schedules.
In terms of scheduled (and unscheduled) overtime, the software allows you to see both timesheets and payroll in one place, making it easier to keep track of overtime worked and pay out accordingly. You can also use overtime information to get a payroll estimate.
"It can be difficult for business owners to keep up with changes in overtime and compliance laws, which is why Planday handles that automatically," says Christian Anders Jørgensen, head of marketing automation at Planday. "When managers schedule shifts in Planday, the system gives the manager compliance warnings if they try to schedule an employee for overtime hours. This allows managers and business owners to focus more on growing their business instead of worrying about compliance whenever they create a schedule."
As Namely says in its blog: "Understanding how many hours, and how much overtime nonexempt employees may be entitled to, can help you make the best decisions on classifying employees and how to plan payroll going forward. In addition, you need to monitor work hours to make sure nonexempt employees are paid correctly for overtime. Scheduling tools, payroll platforms, and other HR software can help to automatically track hours and pay employees accordingly."
That is exactly what HR, benefits, and, payroll software Namely can help with. The app captures time worked - including any overtime clocked up by employees - and feeds this information directly into the payroll.
Namely's compliance module makes sure you adhere not just to federal laws such as the overtime regulations, but also state and local laws. With the software's reporting features, you can also keep track of which employees are now being paid to work overtime and how much this is costing your business.
HR and employee management software Humanity aims to make it easier for your company to regulate overtime pay. The app allows you to set rules on how many hours employees can work over their normal amount - which is crucial if they normally work 40 hours - as well as determining the rate for each different job role.
With the new HR laws make shift planning a key element of workforce management, Humanity can automatically calculate the most efficient shift or schedule structure for a company, and notify employees by SMS or email. With the introduction of these new HR regulations this is a crucial feature that allows business to avoid paying unnecessary overtime due to poor shift planning.
As well as looking at data to judge which apps can best help you adapt to the new overtime rules, it's also important to get opinions from the people already using great HR software to manage their overtime.
Integrating your time tracking and payroll apps can help you better manage your overtime rules. Hubstaff is a time tracking app that takes screenshots and measures activity levels from both the desktop and mobile apps.
The app allows you to limit how many hours each team member can work in a week and automatically prevents them from working past this limit, which is a handy feature when dealing with overtime.
While you can pay your team members from Hubstaff, Gusto is a useful app that integrates with Hubstaff and includes overtime payroll functionality. This includes the ability to enter regular or double overtime hours for employee, with the rates calculated from your company's payroll schedule. Gusto allows you to pay overtime in three different ways:
One overtime pay rate for your employees
Multiple, differing overtime pay rates on a weekly pay schedule
Multiple pay rates that don't follow a weekly pay schedule.
Ben Walker, CEO of Transcription Outsourcing, uses Hubstaff and Gusto to do just that. He says: "The two things we use to track and pay for overtime are Hubstaff.com and Gusto.com. I wouldn't part with either one of those after having used both of them for months now. Hubstaff has an iPhone App and an Android App, so my people can get paid no matter where they work, from the office, home, or even on the bus commuting to or from work."
Walker adds: "Gusto makes paying them so simple you just enter the hours and it calculates and pays them automatically. Like I said I would not part with either of them at this point, they're just too easy and convenient to use."
Scheduling and workforce management app ShiftPlanning allows you to create overtime rules for different positions, levels, or accounts. These rules can be applied on a daily or monthly basis. If you create a shift that exceeds any overtime limits, ShiftPlanning will show this as a conflict on the schedule.
Other useful overtime management features include the ability to assign different rate cards to overtime, and to automatically account for any unpaid deductions during the overtime hours or shifts worked.
GetApp reviewer D.L. Watson, producer/director/VFX, says: "My TV/Film Production company has been using Shiftplanning for 2+ years and being able to not only have time-track hours, but also schedule shifts, have pay-rates increase or decrease based on either location and or time of the day, ability to keep overtime in check, and integrate our favorite calendar for event scheduling is a huge benefit for our company."
Employee scheduling solution When I Work aims to make tracking overtime easier by allowing you to set the maximum hours for each individual employee. If this number is exceeded, it will turn red within the system. The app also sends out alerts to managers when they are close to paying overtime, which helps reduce unanticipated overtime costs.
Jean Shinkle, emergency dispatch center manager at Kings III Emergency Communications, says that When I Work: "shows which employees will go into overtime if they cover a shift so that you decide if you want to notify them for the shift or not. When an employee takes the open shift the schedule is automatically updated. All of our employees can see their schedule from their phone and have the ability to swap shifts with other employees or request to drop a shift. When this happens supervisors are sent a notification to either approve or deny it.
"Supervisors can view the entire schedule to see who is scheduled for the day, all from their phone. When logged into a PC you can see how many employees are scheduled to be on shift for each hour. It also calculates how many total hours are scheduled each week."
Timesheets.com allows you to set time tracking levels for individuals in three different ways:
No overtime to be calculated (for employees who earn over the $47,000 threshold)
Weekly overtime with the default limit set at 40 hours per week
Daily overtime, which accounts for anyone who is paid double time for working overtime.
The app includes features for automatically deducting unpaid break, restrict employees from clocking in before their start time, and either automatically clock them out at the end of their shift, or receive a notification if they clock out late.
"Since there will be many hundreds of thousands and potentially millions of employees switching their exempt status to non-exempt, employers will need to both track overtime accurately and, hopefully, limit overtime as well," says Peggy Emch, director of Marketing at Timesheets.com. "In response to the new rule, we will be rolling out a new notification feature in November that alerts employers when their employees are nearing overtime. Keeping overtime to a minimum should be pretty simple when you get a real-time text or email telling you to send your employees home."
One GetApp reviewer says: "This program has solved so many problems for us! We manage a hotel remotely and there were definitely some shenanigans going on with hours and overtime. By implementing the photo stamp clock in/out feature, we now have 100% accurate hours for each employee. If a change needs to be made, we get a notification and can approve/deny the record immediately. It is easy to monitor time - the reporting is fabulous! And it imports hours into quickbooks. My most dreaded task was entering everyone's hours…now with a few clicks of a button, everything imports and totals."
While Zenefits has been in hot water over the reclassification of workers from exempt to nonexempt (ie eligible for overtime) and, more recently, investigations into whether their workers were properly licensed, the app is still a good option for keeping track of overtime paid to your employees. The Time & Attendance module allows both managers and employees to keep track of overtime worked, as well as syncing this information with payroll.
Zenefits explains: "With the new overtime rules, every business will need to track the hours of all employees who make less than the new threshold established by the U.S. Labor Department, and accurately pay them for their work (or they'll be in noncompliance).
"With Zenefits' Time & Attendance module, small businesses can track hours and sync them right up with payroll, whether they use free Zenefits Payroll or a another service. When they integrate Time & Attendance, payroll and all their HR and benefits in one comprehensive dashboard, Zenefits makes it effortless to handle all those things and ensure they are in compliance with federal and state regulations."
Garrett Mehrguth, CEO of digital agency Directive Consulting, explains why his company uses Zenefits: "Our team members love the PTO tracking on Zenefits and the ease and comfort of Gusto for checking on paychecks. From a management perspective, we have been able to save hiring a full-time employee by utilizing all the on-boarding and PTO management features of Zenefits. The two together has been a margin and time saving dynamic duo. Zenefits has a time and attendance app built in that you can install on an iPad use to track for exempt or part time team members."
Check out independent user reviews of cloud-based workforce management apps to help you decide which HR app would best suit your business.
This article was first published in May 2016, and has been updated to reflect the ongoing litigation and plans from the new administration.