Navigating the new Department of Labor overtime rule
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Keeping up with changes to governmental regulations is just one of the challenges faced by businesses that do a lot of hiring. The Department of Labor issued a new final rule on overtime pay that takes effect July 1, 2024. This rule comes on the heels of another DOL change – this one regarding classification of workers – that rolled out in March 2024. Knowing these rules and clearly understanding how to navigate them is critical for business owners.
Under the new overtime rule that takes effect July 1, more salaried employees will be eligible for overtime when they work more than 40 hours per week. Previously, salaried employees making $35,568 per year ($684 per week) or more were not required to be paid overtime. As of July 1, the base increases to $43,888 annually ($844 per week). It will go up again in January 2025 to $58,656 per year ($1,128 per week) and will rise every three years thereafter.
Dollars and sense
With more salaried employees becoming eligible for overtime, business owners can end up paying a big premium. For example, when employees have to take on extra hours to cover shifts normally filled by hourly workers who call in sick or don’t show up for work, the overtime rule would apply.
For a salaried manager earning $880 per week (effectively $22 per hour), the business would end up paying $33 per hour (assuming time-and-a-half for overtime) for those shifts. Rather than paying a manager to work those hours, using an outside staffing agency to provide temporary employees would fill those shifts at a lower effective rate.
Planning ahead
Staffing companies do a lot more than provide temporary employees. Some of the best also provide recruiting and hiring services for permanent employees, all the way from entry-level managers to executives. Planning ahead for the new rule is key.
Here are some of the situations in which using an outside company for hiring can be advantageous:
Periods of growth: During times of rapid expansion, management demands can be overwhelming. More staff is needed just at the time current staff are busy managing details of the new operations. Outsourcing hiring to a trusted partner makes good sense in this situation, as it brings top candidates to the table while giving management time to see to other aspects of the expansion.
Need for special skills: Some roles require specialized talents or experience. Using management to hunt for potential candidates for these positions can be time-consuming and expensive. An outside recruiter with experience in the same industry can carry out the search more efficiently and identify more qualified candidates in less time.
History of less-than-ideal hires: When there is a lot of turnover in the same positions, or employees are underperforming, it may be a sign that the internal hiring team is out of sync with what the business needs. An outside recruiting and hiring company can help by bringing fresh eyes to the situation. A trusted hiring partner will take the time to learn about company culture and the specific needs for each position being filled. Their objective perspective can help establish a new pattern of successful hires.
Choosing a hiring partner
Successful outsourcing of hiring is based on having a trusted relationship with a staffing and recruiting partner. The client’s role is to provide the job requirements; the staffing company recruits and screens candidates, then performs initial interviews. The client receives a list of potential candidates they can interview for the final hire.
This arrangement works best when the staffing company is committed to a relationship with the client. They learn about the business and its culture so they can find the best potential hires, not just an X to tick a box. Over time, as the client and the staffing agency learn more about each other, the process becomes even more seamless.
Don’t be afraid to ask a lot of questions when selecting a hiring partner. Find out about their relevant experience. Ask about how they communicate. Inquire about their vetting and screening processes. Trust and transparency are the key attributes of a good long-term staffing partnership.
George Lessmeister is CEO and founder of LGC Hospitality, a national staffing firm headquartered in Indianapolis. LGC has offices in over 40 U.S. cities. Team members work with hotel and restaurant leadership to place executives and temporary workers.