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The Impact of New Overtime Rules on Self-Storage Employers and Their Staff

By Scott Zucker Comments
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New overtime rules from the U.S. Department of Labor will affect millions of workers, including self-storage managers and the companies that employ them. The May 16 final ruling focused on one significant issue: What’s the minimum salary required for exemption for overtime wages?

Before the change in regulation, that minimum was $23,660 annually, or $455 per week. Effective Dec. 1, the new minimum will be $47,476 annually, or $913 per week. This change basically doubled the salary threshold for employees to reach exempt status. Now, those making less than $47,476 annually will be entitled to time and a half for every hour they work beyond a regular 40-hour work week.

Even if an employee meets this threshold level for salary, it doesn’t mean he’s suddenly exempt. By the nature of his work and the fact that he generally manages the property but not other staff members, a self-storage manager won’t meet the executive or administrative criteria required to become exempt. Therefore, regardless of salary, it’s likely that a typical facility manager who makes the requisite salary will remain non-exempt and entitled to overtime. Let’s explore what this means for self-storage owners and their staff.

Owner Options

As a result of this regulatory revision, certain self-storage operations will likely need to change the way they do business. For example, many operators will shift into a world of compliance, having employees “punch” a timeclock to verify regular and overtime hours. Others may impose restrictions on employees to limit overtime work or the number of hours that can be worked altogether. Some may hire more employees to avoid overtime obligations for current staff, and others may change or remove bonus plans based on the need to budget instead for overtime costs.

As always, it’s important for owners to prepare a clear and well-drafted employment agreement to address:

  • The expected number of hours to be worked
  • What constitutes permission to perform overtime work
  • How the employee’s salary is calculated if he’s non-exempt (perhaps written as X regular hours times standard wage plus X overtime hours times overtime wage)

Resident Management

Some owners will also need to address the issues that apply when an employee is living on the premises. The value of an apartment can’t be used to reach the exempt-compensation threshold. This can only be reached through monetary compensation.

Although the value of an apartment can’t be used to meet the minimum salary threshold for an exempt employee, it can be considered as “wages” for a non-exempt employee to meet minimum wage. However, if the apartment value is used to pay wages for non-exempt employees, then the value of the apartment must also be considered in calculating the employee’s overtime rate.

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