Tag Archives: supervision

The impact of overtime on salaried personnel


Since president Obama signed (28 May 2016) legislation raising the minimum bar for salaried people to qualify for overtime, I have been getting two questions: (1) What does this mean and (2) How does it affect my shiftwork operation.

The answer to the first if fairly straight forward.  If you have a salaried person at your facility that is being paid less than $47, 476 a year, then you must pay overtime at the rate of time and one-half for all hours worked in excess of 40 in a pay week.

The second is less clear.  My hope is that a few observations on my part will help you to see the impact for your operation.

First of all, I will be speaking to the roll of direct supervision of hourly employees in a shiftwork operation.  This is often an industrial setting but need not be so.

Supervisors are typically salaried.  Sometimes they are home-grown in that they come from the existing hourly workforce.  Sometimes they are brought in from the outside.

This new overtime rule means that if you are paying your supervisors less than about $26 an hour, then you must pay them overtime when they work over 40 hours in a week.

Let’s be clear, someone coming to work for a wage or any other benefit represents and agreement between two parties: (1) the employer and (2) the employee.

The employer says “I will compensate you this way if you work here.”  The employee says “I will work there for this compensation.”

To this extent, the law may be self correcting.  Employers faced with paying overtime may offer a lower starting salary while employees, may accept a lower starting salary knowing that overtime will be added to it.

Now, “compensation” can mean a lot of things.  Historically, being promoted to a supervision role means that you get more money per hour.  However, this does not always correspond to “more money overall.”  Frequently, supervisors get a higher hourly rate (paid as salary) but then lose out on what may have been a significant amount of income from overtime; overtime they are no longer eligible for.  There is no shortage of people that have turned down salaried roles because they didn’t want the pay cut.

Management often argues, correctly, that the compensation for supervision goes beyond wages.  Salaried positions often make “decision makers” out of “decision takers.”  For many, the draw of a position of responsibility can be huge.

Salaried positions sometime pay overtime-type wages if you come in on a day off while not paying it if you work a longer than scheduled day.

Salaried positions sometimes offer compensatory time off if you work extra hours.

Managers hire a salaried person and tell them “This amount of salary includes compensation for the expected extra hours you will work.”  In other words, they are saying that they are building the overtime wages into the offered salary.

Maybe there is a company car or free lunches or better vacation.

Probably one of the biggest reasons someone will take on a salaried position is that it represents a stepping stone to something even bigger; perhaps a promotion to the level of really big dollars.

In the end, it still comes down to the agreement.  Compensation = Filled Position.

If you are paying your supervisor less than $47,476 per year,  then I have to say, “You get what you pay for.”  I know that can be harsh in certain markets that only provide the thinnest of margins.  Still, good leaders are hard to come by.  There is competition for them and if you don’t pay them enough, they will leave for greener pastures.

Of all the companies I have worked with over the last 28 years, probably none of them paid less than the $47K bar set for overtime wages (in today’s dollars).  Discussion about this law states that it protects 4.2 million salaried employees.  In truth, they may be protected but are probably not affected.

In short, the impact of this law is far more political than practical.  Chances are great that you will be unaffected in some major way.

Scheduling Supervision


Let’s cut right to the chase on this one: Should supervisors be on the same schedule as the people that they supervise?

The answer is unequivocally – YES.

Supervisors have one of the most complicated tasks at any facility.  This comes from having to wear two hats at the same time.  They are managers and must support the goals and processes that come down from above.  They are also managers in change of the productivity, safety and well-being of those underneath them.

To do this, the supervisors need consistency.  The need to work for the same people so they are getting a consistent message from above.  They also need to have people working for them that they know.  They need to know who needs extra supervision and who can work well independently; who will perform better when verbally praised and who only works under the threat of sanction.  The more often a supervisor matches the workload of his or her crew, the more they know those that work under them.

Equally important is the view from below.  People need to know what is expected of them.  In large part, this expectation comes directly from their supervisor.  You don’t want an operator saying, “Well, Bob wants me to do it this way and Sue wants me to do it that way so I guess I’d better wait and see who shows up to be my boss today.”

There is also the need for accountability.  A supervisor cannot be expected to be accountable to a shift that he or she is only supervising part time.

There is broad acceptance of this idea, so why spend so much time on it?

There are a couple of reasons…

First, companies often find resistance from the workforce when they try to change schedules. This can be significant.  If you don’t think so, change your shift start times by 15 minutes and see what happens; then imagine what would happen if you went from a 5-day to a 7-day schedule.  To “soften” the blow, supervisor schedules may be changed first.  They go from a 3-crew, 8-hour schedule to a 4-crew, 7-day schedule.  This change immediately gives the supervisors 78 more days off per year than the 5-day schedule.  The idea is for the workforce to see all of the newly happy supervisors and think “Hey, I gotta get me some of that.”

The problem is, that this “demonstration” can go on for some time.  There is often no objective way to see how far the workforce has swung towards wanting a change.  Furthermore, if the desired effect is not achieved, you will run into supervisor complaints if you try to take their new and improved schedule away from them.  I don’t want to imply that this strategy cannot work. I just want to say, “be careful” when you do it.

Some companies will shy away from the trend of longer shifts for more days off.  They may want to go to a 7-day schedule but using 8-hour shifts instead of 12-hour shifts.  Mathematically, you have two choices here.  If you go to 8-hour shifts, and you want the supervisors to match the employee crews, then the schedule will have to rotate.  Or, and additionally due to math, you can have fixed shifts but the supervisor schedule will not match the crew schedule.  (Give me a call if you want more details on this one).

I have done nothing but work with companies to help them evaluate, design and implement shift schedules for the last 25 years.  It has been my experience that the supervisor component is one of the most important and most overlooked contributors to the success or failure of such a change.