Proposed Overtime Rule Changes: A WorldatWork Survey Brief
Proposed
Overtime Rule Changes
A WorldatWork Survey Brief
December 2003
In late-December 2003, WorldatWork
fielded a survey to 4,992 members regarding the U.S. Department of Labor’s
proposed changes to overtime regulations. A response was received from 999 compensation,
benefits and total rewards professionals; a 20 percent response rate. Fifty-nine
percent of the respondents reported working with the exemption tests at least
every couple of months or more frequently, on a monthly or weekly basis.
This was the third survey
of WorldatWork members in 2003 on proposed FLSA changes and the Dept. of Labor’s
proposed rules.
The results of the January
2003 and June 2003 surveys are available (for members) at www.worldatwork.org
in the Library/Surveys and Research page, or (for non-members) by contacting
Ryan Johnson, WorldatWork Public Affairs and Surveys Manager at 480/905-5986.
Summary Highlights
Sixty-four percent of
organizations have not yet analyzed the potential impact of the proposed
Department of Labor rules to reform the exemption tests. It is likely that
some organizations believe that it is premature to do any analysis before
final rules are published.
Among those that have
analyzed the impact, 62.9 percent (n=156) estimate that less than two percent
of employees would be reclassified from non-exempt to exempt under the proposed
rules. Thirty-nine percent estimate that zero employees would be reclassified
from non-exempt to exempt.
Among the organizations
that report they have analyzed the potential impact of the proposed rules,
70.4 percent (n=176) estimate that less than two percent of employees would
be reclassified from exempt to non-exempt. Fifty-two percent estimate that
zero employees would be reclassified from exempt to non-exempt.
When asked about the
highly-compensated employee provision in the proposed rules in which any
office or non-manual employee making more than $65,000 per year can be reclassified
to exempt status, the single largest percentage of respondents (44%, n=431)
report that they currently have zero non-exempt employees earning that salary
level or higher.
When asked to indicate
how much time their organization would need to implement any final set of
new rule, the single largest percentage of respondents (28%, n=268) indicated
their organization would need 90 days, followed closely by 24% (n=231) who
reported they would need more than 120 days.
Survey Results
Despite the issuance of
the proposed rules on March 31, 2003, a ninety-day public comment period, and
extensive political and press attention on the issue, 64 percent of organizations
(n=631) reported in late December 2003 that they have not yet analyzed the potential
impact of the proposed rules, while 27 percent (n=263) have analyzed the potential
impact (see Figure 1).
Figure 1:“In
March 2003, the U.S. Dept. of Labor issued proposed rules for reform of
the FLSA exemption tests. Has your organization analyzed the potential
impact of these proposed rules on your workforce (i.e., how many people
might be reclassified)?
Among 248 organizations that reported
they have analyzed the potential impact of the proposed rules, 39.1% (n=97)
said their internal analysis indicates that zero employees would be reclassified
from non-exempt to exempt under the proposed rules. Cumulatively, 89.1% (n=221)
of the organizations that have analyzed the potential impact of the proposed
rules report that few than 10% of their workforce will be reclassified from
non-exempt to exempt status (see Figure 2).
Figure 2:“If yes, can you estimate how much of your workforce might be
reclassified under the new rules from non-exempt to exempt?”
[1]
Percent
of workforce to be reclassified from non-exempt to exempt.
%
n=
Mean
4.8%
Median 1.0%
Minimum 0.0%
Maximum 50.0%
Std Dev 8.40
“zero”
39.1%
97
0.01%
- 1.0%
15.3%
38
1.1%
- 2.0%
8.5%
21
2.1%
- 4.9%
2.4%
6
5.0%
- 9.9%
14.1%
35
10.0%
- 12.0%
10.1%
25
12.1%
- 15.0%
3.2%
8
15.1%
- 20.0%
1.2%
3
More
than 20.1%
6.0%
15
total
100.0%
248
Among the 250 organizations
that reported they have analyzed the potential impact of the proposed rules,
52% (n=130) said their internal analysis indicates that zero employees would
be reclassified from exempt to non-exempt under the proposed rules. Cumulatively,
85.6% (n=214) of the organizations that have analyzed the potential impact of
the proposed rules report that few than 10% of their workforce will be reclassified
from non-exempt to exempt status (see Figure 3).
Figure 3:“(if your organization has conducted an analysis of the possible
impact of the proposed rules) About how much of your workforce might be
reclassified under the new rules from exempt to non-exempt?”
[2]
Percent
of workforce to be reclassified from exempt to non-exempt
%
n=
Mean
3.4%
Median 0.0%
Minimum 0.0%
Maximum 40.0%
Std Dev 6.50
“zero”
52.0%
130
0.01%
- 1.0%
10.0%
25
1.1%
- 2.0%
8.4%
21
2.1%
- 4.9%
3.2%
8
5.0%
- 9.9%
12.0%
30
10.0%
- 12.0%
5.6%
14
12.1%
- 15.0%
2.8%
7
15.1%
- 20.0%
2.4%
6
More
than 20.1%
3.6
9
total
100.0%
250
When asked about the highly-compensated
employee provision in the proposed rules in which any office or non-manual employee
making more than $65,000 per year can be reclassified to exempt status, the
single largest percentage of respondents (44%, n=431) report that they currently
have zero non-exempt employees earning that salary or greater. The next largest
percentage of respondents (15% in two categories) reported: “between 1
and 5 employees” (number, not percent) and “more than 100 employees.”
Figure 4: “How
many non-exempt employees do you have currently making more than $65,000
per year?”
Finally, when asked to indicate
how much time their organization would need to implement any final rule changes
after being published by the Department of Labor (in essence, the amount of
time preferred before an effective date), the single largest percentage of respondents
(28%, n=268) indicated their organization would need 90 days, followed closely
by 24 percent (n=231) who reported they would need more than 120 days (see Figure
5).
Figure 5: ”When
the Dept. of Labor issues final rules there will be a transition period
before the rules are officially effective. How much time do you believe
your organization will need to implement any proposed rules changes?”
About the Sample of Respondents
A typical member of WorldatWork is
employed at the manager or assistant director level or above and has at least
five years of experience in the HR or compensation fields. In addition, he or
she is most frequently employed at the headquarters of a large company in North
America. Ninety-five percent of the Fortune 500 employ at least one member
of WorldatWork.
For the survey results presented
in this brief, the respondent demographics are as follows:
Organization size,
by number of employees
n=
%
less
than 100
68
8.1
100
to 499
93
11.1
500 to 999
80
9.6
1,000
to 2,499
128
15.3
2,500
to 4,999
128
15.3
5,000
to 9,999
112
13.4
10,000 to 19,999
79
9.5
20,000
or more
147
17.6
total
835
99.9
Organizational Unit
n=
%
Headquarters
551
66.1
Subsidiary/group/division
129
15.0
Regional headquarters
29
3.5
Plant/branch
21
2.5
Other
107
12.7
total
837
99.8
Industry, based on
North American Industrial Classification System
n=
%
n=
%
Manufacturing
163
16.5
Wholesale
Trade
13
1.3
Finance
& Insurance
108
10.9
Transportation &
Warehousing
11
1.1
Prof.,
Scientific & Technical.
76
7.7
Accommodation
& Food Services
10
1.0
Healthcare,
Social Assist.
53
5.4
Real
Estate, Rental & Leasing
7
0.7
Utilities
36
3.6
Arts,
Entertainment & Recreation
4
0.4
Public
Administration
36
3.6
Construction
4
0.4
Information
29
2.9
Agri.,
Forestry, Fishing & Hunting
4
0.4
Other
Services
28
2.8
Mgmt.
of Companies
2
0.2
Education
Services
22
2.2
Waste
Mgmt and Remed.
1
0.1
Retail
Trade
21
2.1
Other
80
8.1
About WorldatWork®
WorldatWork is the world's leading
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compensation, benefits and total rewards. Founded in 1955, WorldatWork focuses
on human resources disciplines associated with attracting, retaining and motivating
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[1] Note: this was an open-ended “fill in the blank” type of
question.
[2] Note: this was an open-ended “fill in the blank” type of
question.
