New Overtime Laws Causing Confusion for Local Businesses

Businesses, especially those based in the outdoors, are trying to figure out how new law will affect them

By Molly Priddy

On Dec. 1, many paychecks around the Flathead Valley may look a little different as the new federal overtime law takes effect across the country.

The change came about in May, when President Obama signed a presidential memorandum directing the U.S. Department of Labor and Industry to update the regulations defining which workers in America qualify for overtime according to the Fair Labor Standards Act.

The new salary threshold doubled: The current rule grants overtime to people who gross less than $23,660 per year on the time they clock past 40 hours a workweek. On Dec. 1, that salary benchmark increases to $47,476, or anyone who makes less than $913 per week, will be eligible for time-and-a-half pay. The last time the benchmark was updated was 2004.

The Labor Department estimated the rule change could mean an additional $12 billion in worker pay over the next decade.

Additionally, the change includes an automatic adjustment to the salary threshold every three years, tying it to the 40th percentile of full-time salaried workers in the lowest-wage region of the United States.

It’s a major change impacting many small businesses in the Flathead, according to Kalispell Chamber of Commerce President Joe Unterreiner.

“I think people are just trying to make sense of it and how they’re going to adjust to it,” Unterreiner said.

The Kalispell Chamber didn’t support the overtime change, but rather signed on to a letter with the U.S. Chamber of Commerce to support a bill that called for phasing in the changes, which he said would give the country time to evaluate all the different moving parts.

There are several aspects that remain vague to some businesses, he noted, and several of those local business owners still haven’t found the answer they’re looking for.

“The group we’re hearing from the most with the most questions are the outdoors companies,” Unterreiner said.

At the Bob Marshall Wilderness Foundation, executive director Carol Treadwell said she’s trying to figure out how to manage her field staff while also abiding by the law. The main question so far is when the workday begins and ends for a trip guide, she said.

“The rules of the Fair Labor Standards Act say you have to pay your employee on a 40-hour scale within the seven-day period,” she said. “You can’t just leave your volunteers stranded after 40 hours.”

There are exemption laws for permanent licensed outfitters, Treadwell said, which allow them to pay a daily wage instead of basing it on a week scale.

“My organization can’t fall under that because we’re not licensed outfitters, and we can’t buy a license because we’re not-for-profit,” Treadwell said.

She said she’s also taking care to make sure she’s fair to her employees, but the nature of the business means she won’t know the number of hours or overtime until the season is upon us. The guides’ salaries are based on the length of the trips she sends them on, and a trip from a Wednesday to a Wednesday would cross the Saturday start-over point, meaning they wouldn’t be technically working overtime because it’s split between two workweek periods. It wouldn’t be fair, she said.

“That’s the same work for less money,” she said.

Treadwell said it would be easier for her organization if she could pay like licensed outfitters, and that could happen if there were a modification in state law.

“I know that I have to pay overtime; I’m not trying to get around it. Every year, I try to calculate a fair wage based on the amount of hours and overtime a crew leader is going to work,” Treadwell said. “Bob Marshall Wilderness Foundation has been around for 20 years, and we’ve been around for 20 years because we’re honest and we have integrity and we follow the law.”

Cassie Baldelli, one of the owners at Glacier Raft Company, said her company’s concerns fall around its year-round employees, since seasonal employees fall under the exemptions. But the rules look like they may pinch a business that does the bulk of its work in the summer season.

“On the (issue) with the raised cap, I think it’s going to end up changing the way we structure our contracts,” Baldelli said. “It’s definitely a headache and it definitely isn’t conducive to businesses where there’s more heavy work in the summer.”

The company is also trying to figure out if the law will affect how they run overnight guided trips. The guides are paid per trip, she said, and if they have to start paying more per trip, it could impact how many trips go out.

“It’s really hard to figure out if the guys are on an overnight trip, do you count when they’re sleeping (as work hours toward 40 per week)?” Baldelli said. “It would really change what we would be able to offer and allow.”

She said they would likely take their cues from whatever results from the America Outdoors Association conference, taking place Nov. 30 to Dec. 2.

At Kalispell Regional Healthcare, Dane Wilson, director of Human Resources, said the new threshold rule would affect about 1 percent of their employees, totaling around 50 people. Each of those employees will be considered individually for adjustment, either above the threshold or not, he said.

Wilson also said while the future of this law may change due to the recent presidential election, Kalispell Regional and most other businesses are defaulting to doing it.

While there are different ways to interpret the law change, Wilson said, businesses really have two choices: Pay employees more so they are above the threshold, or grant overtime.

“It’s impactful to everyone, whether you’re big or small,” Wilson said.

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