You may not be aware of the new rules regarding overtime pay that will be in effect as of December 1st, 2016. Here are a few basics from the Department of Labor website to get you up to speed:
- Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
- Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
- Strengthen overtime protections for salaried workers already entitled to overtime.
- Provide greater clarity for workers and employers.
This new ruling will impact up to 40,000 workers in the state of Kansas, including those in manufacturing. The same website also depicts the graphic shown above about how employers can respond.
What the website doesn't show, and this is not meant to be a political debate, is how employers can control their costs while enacting any combination of the proposed solutions. The answer is through productivity gains. The new ruling is targeted to impact 'white-collar' positions, not normally associated with productivity gains. The truth is there are as much, if not more, opportunities for productivity gains on this side of the business, especially in manufacturing. With this ruling, there is more urgency to look at your business and determine how many employees will be impacted by this ruling, estimate the cost to your business and look at methods to be more productive to reduce or even neutralize the impact of this ruling to your business.
I have been involved in many white collar type productivity improvements. Examples are as follows:
- 20% improvement in cost of processing a purchase order from request to vendor payment
- 50% reduction in the lead time of purchase orders
- Improvements to shop order ticketing system which led to a 10% reduction in execution errors due to miscommunication
- 35% reduction in WIP from streamlining scheduling system and updating lead-times and processing times.
- Establishment of quality standards and testing procedures leading to a 30% decrease in spoilage
There are so many other ways to improve productivity to strengthen your business. Contact me to discuss more about this ruling and an assessment of how it might impact your business. You can also click here to get more information as well.
Time is running out.