By David Clucas
Upcoming changes to the nation’s overtime-pay rules have many businesses rushing to adjust pay structures and policies ahead of the rules going into effect December 1, 2016.
Beyond the larger implications for a company, many in the active-lifestyle industry are looking at the potential issues come trade-show time, when employees undoubtedly put in extra hours on the job.
SGB turned to Lori Kleiman of HR Topics to ask how businesses can be prepared when shows like Outdoor Retailer Winter Market, CES and the SIA Snow Show roll around in January.
The Rule Change
The first thing Kleiman points out to her clients is that the overtime law isn’t changing — overtime is still defined as work over 40 hours a week. What’s shifting is who qualifies for overtime pay.
Up until December 1, companies could exempt some of their salaried employees from overtime pay if the job met certain “means tests,” such as a store-manager position. These employees also had to make a minimum of $23,660 a year, a level set back in 1975. Some companies have been taking advantage of that, according to government officials, by paying their workers a low salary (by today’s standards), giving them a manager title, then working them more than 40 hours a week without overtime pay.
It’s this minimum pay level for overtime-pay exemption that’s being updated — more than doubling to $47,476 in annual pay (or $913 per week), based off the 40th percentile of earnings of full-time salaried workers in the lowest-wage U.S. Census Region, currently the South. That figure will adjust, based on inflation, every three years.
Simply put, the change will require companies to pay their full-time workers overtime hours if they make less than $47,476 per year and work more than 40 hours per week. It will affect thousands if not millions of younger workers in the active-lifestyle industry, those working shop floors and more entry-level jobs.
At The Trade Show
Look around any trade-show floor in the industry and you’ll see plenty of younger faces working the booths and in the aisles. If anything, they view the experience as a treat — a week out of the office or away from the floor with dinner, drinks and dancing after hours. But in many of these instances, they’re also on the clock in the eyes of the government.
For employees who make less than $47,476 a year attending trade shows, companies will have to go in with an overtime game plan, Kleiman said.
The first and most complicated question is calculating hours during travel. Kleiman said the rules are complex (see here), and she can’t give legal advice in an article. But in essence, if an employee is traveling during their normal business hours and/or expected to conduct work during travel, then that time is counted as work. If travel is outside their normal business hours and the employee is free to read a book or watch a movie, then more often than not, these hours aren’t considered work hours.
At the trade show, an employee working in the booth is obviously on the clock, but what about afterward, say, meeting a client for dinner and drinks? If the employee is required to attend, then they’re still on the clock, Kleiman said. “Even if the company is footing the bill for a $200 steak dinner with expensive wine, it’s considered work hours,” she said. If the employee instead chooses to head out with friends for dinner on his or her own volition, or go back to the hotel and order room service, then that’s not counted as work hours.
Considering these rules, Kleiman said it’s important for companies to estimate what overtime might arise and plan accordingly. It might mean allowing non-exempt employees to cut free after a full eight-hour day on the show floor. Another option would be having them work four 10-hour days, then giving them the fifth day of the week off — that still totals 40 hours a week, with no overtime-pay required.
Kleiman said some companies will come to terms with the fact that they’ll have to budget in some overtime pay for employees. For example, if an employee makes $37,000 a year in salary, that works out to about $712 a week, or about $18 an hour. If the employee works 55 hours during the trade-show week, that’s 15 extra hours at time-and-a-half (in this case, $27 per hour) for an additional $405 that week. That likely won’t break the bank if it’s essential that the employee be at the show. The important thing, Kleiman said, is to appropriately budget for the extra costs and come to an understanding with employees what those overtime budgets are. “Have an open and frank discussion with your employees,” she said.
Trade Show Education
Officials with Outdoor Retailer and the Outdoor Industry Association acknowledged that the new overtime rules will affect their members’ daily business. It’s the main reason they’ve had Kleiman giving presentations at Outdoor Retailer and OIA Rendezvous.
But with respect to the trade shows themselves and the overtime rule, they said they have yet to hear any concerns.
“At this moment, we are not seeing any adverse impact on registration or housing reservations,” said Kate Lowery, communications and PR director for Outdoor Retailer. “That said, the new rules provide an opportunity for Outdoor Retailer and OIA to work together to educate our community with informative education sessions at Winter Market.”
Kleiman said employees will start asking more questions of their employers as media reports ramp up to the December 1 start date, so companies will need to be prepared.
