ALPAHRETTA, Ga.—If new labor guidelines for overtime pay go into effect, one analyst said there is an important number for credit unions to consider when making salary decisions—as well as other issues that must now be considered.
Under the proposal that was issued in June by the Labor Department, salaried workers earning less than $50,440 would be eligible for time-and-a-half pay when working more than 40 hours in a week. The current cutoff is $23,660.
W. Michael Scott, President/CEO OF FMSI, an authority on branch productivity, told CUToday.info that for salary employees—such as head tellers, assistant managers and branch managers—$37,500 is the dollar amount to focus on.
“Let’s say a salary employee making $37,500 works 10 hours of overtime a week, so 50 hours. If you compute that down to an hourly pay rate, and then one-and-a-half times for the overtime hours, that employee will hit that $50,440 cutoff point each year,” Scott explained. “That’s breakeven under the proposal.”
Time For Pay Increase
But if a salary employee is making closer to $40,000 annually, and if the staffer works at least 10 hours of overtime each week, Scott said it might be best to increase the person’s pay to the $50,440 cutoff.
W. Michael Scott, FMSI
Scott said the proposed rules will force FIs to do a better job of managing branch staffing by using transaction data, as opposed to going with their gut.
“Credit unions do a good job of managing their branches, but we find that scheduling to need is key, and it will be even more so now,” offered Scott, who said that scheduling is often simply based on operational hours.
“I do think that financial institutions will be forced to look at their entire scheduling process, use more part-timers as opposed to scheduling overtime, follow better schedules and hold people to those schedules.”
Scott pointed out that a recent Celent study shows that only 3% of financial institutions use a sophisticated scheduling engine—a program that matches staffing to the transaction history of each branch.
“The scheduling engine becomes even more important under these new rules,” he said.
Know Where You Stand
Scott also added that it will be just as important for CUs to know what their peers are paying branch staff.
“Everything is relative,” said Scott. “You won’t know that you have a situation unless you know your numbers and how you stack up against peers. You need comparative data, showing labor cost per transaction, pay rates, etc. We have seen with clients, when they see that kind of data, that is what effects change.”