The U.S. Department of Labor’s new overtime rule marks a major shift in compensation policy, significantly raising the salary threshold for exempt status under the Fair Labor Standards Act (FLSA).
This change reclassifies millions of U.S. workers, granting them eligibility for overtime pay.
For HR teams, this goes beyond mere compliance—it poses a complex operational challenge with significant financial and cultural impacts. Implementation difficulties differ across sectors: a tech startup with a fluid, “always-on” work culture encounters distinct issues compared to a retail chain tasked with precisely tracking the duties of thousands of store workers.
Successfully managing this shift demands proactive planning and a keen awareness of potential obstacles.
To gain practical insights, we consulted a panel of experienced HR professionals and business leaders from various industries, asking:
“What is one implementation challenge HR teams might face in your industry when updating overtime pay due to recent legislative changes?”
Their responses offer a vital roadmap for organizations striving to comply with these regulations, highlighting critical challenges and strategic approaches for a seamless transition.
Read on!
Dr. Chad Walding
Co-Founder & Chief Culture Officer, NativePath
Dr. Chad Walding
HR teams may have issues keeping track of overtime for employees with non-standard schedules.
HR teams within the wellness and fitness industry may have employees work different hours based on their varying schedules, or other entities that they may have not accounted for because of competing client needs.
A good example of this are Wellness Coaches who may work both in-office and remote, which can make it difficult to track how many hours they actually work.
Making sure that they get fair overtime pay can be challenging to manage in an office with more changing schedules and aspects of work in an environment can make maintaining an efficient time tracking system more difficult, while still allowing your HR team to conduct payroll without having to worry too much about any other permissions, authorizations, or management approvals.
Edward Hones
Founder, Hones Law
Edward Hones
Misclassification Risks During Policy Changes: One major implementation challenge HR teams often face when updating overtime pay policies is accurately reclassifying employees under the new rules.
In the legal field, especially in small firms or nonprofit organizations, roles can be fluid, and titles don’t always align cleanly with FLSA standards.
When salary thresholds shift or duties tests are updated, HR may overlook employees who were borderline exempt, leading to misclassification. That exposes employers to serious liability, including back pay, penalties, and even class action risk.
Communication and Cultural Impact: Another challenge is how those changes are communicated internally. Reclassifying someone from exempt to non-exempt can feel like a demotion if not handled thoughtfully, especially in professional settings where employees value autonomy.
I’ve seen cases where firms failed to explain the change clearly, leading to morale issues and even retaliation claims.
HR needs to prepare not just for the policy shift, but for the human reaction to it, being proactive, transparent, and legally precise in how these updates are rolled out.
Adam Wagner
One challenge creative agencies will face is navigating overtime for hybrid and remote teams.
Tracking hours in a flexible work environment isn’t straightforward—especially when client needs don’t stick to a 9-to-5.
Creative work doesn’t always follow a punch clock, so aligning billable hours with actual hours worked while staying compliant will take tighter time-tracking systems and better manager training.
It’s not just about paying more—it’s about being precise and fair without crushing team morale.
Belize Hans Polloso
In the education technology sector, we’re facing a unique overtime implementation challenge that’s flying under the radar for many HR teams: properly classifying and tracking overtime for curriculum developers and instructional designers.
Just last quarter, we discovered that our curriculum team was routinely working evenings to meet seasonal program launches, but our systems weren’t capturing this properly because we’d historically treated these roles as fully exempt. The challenge isn’t just technical—it’s cultural. These passionate educators often don’t view their creative work as “overtime” but rather as dedication to quality.
The solution required both system updates and mindset shifts. We implemented project-based time tracking tools that integrate with our payroll system while hosting workshops to emphasize that proper compensation actually supports their creative work rather than commoditizing it.
Hasan Hanif
Founder, Colour Vistas
Hasan Hanif
In the case of HR teams in sectors such as mine, where there is a combination of both manual and digital operations, making an overtime pay transition can be hectic.
Among the key obstacles, the necessity to adjust all systems, whether accounting or operational, to the new regulations needs to be mentioned.
I recall the time I shifted my accounting job to establish Colour Vistas. We were expanding rapidly, and we needed to reconsider our payroll system, so it could accept new regulations without failing.
To the HR, particularly in an environment such as mine where time recording is both automatic and manual to some extent, the important thing is to extract the correct records. A simple error in hours classifications or tracking can be very expensive.
Ensuring that the entire team, including the people printing and packaging on the floor, are on the same page when it comes to recording hours can prove to be a considerable challenge, particularly when work shifts and overtime limits are concerned.
Jonathan Palley
Communication is essential here. You need to keep your workers informed about policy changes, especially those who regularly work overtime.
You may get some pushback even if you communicate proactively, but you definitely will if you spring this on people.
Make sure the changes you’re considering are compliant with local laws. Paying overtime is expensive, but dealing with labor law violations can be completely ruinous.
David Hunt
COO, Versys Media
David Hunt
One significant challenge HR teams face when updating overtime pay is ensuring compliance across multiple jurisdictions. In our work with clients in diverse industries, we’ve observed how different states and countries have varying regulations regarding overtime pay, leading to complexities in payroll systems.
When legislation changes, it’s crucial for HR to not only update their existing systems but also provide comprehensive training for management and employees alike. This requires consistent communication and clear guidelines to mitigate confusion and ensure everyone understands the new policies.
Failure to address these areas can result in non-compliance, which may lead to costly fines and damage to employee trust.
Ray Lauzums
One major implementation challenge HR teams in the online retail industry like ours at Poggers may face is accurately tracking and compensating for remote or flexible work hours.
With customer service, logistics coordination, and digital marketing roles often extending beyond standard office hours especially during peak shopping seasons defining what qualifies as “overtime” becomes complex.
Many team members work across time zones or asynchronously, and without precise digital timekeeping tools, there’s a risk of non-compliance or employee dissatisfaction.
Additionally, adapting payroll systems and training managers to align with new legislative standards requires time and resources.
Ensuring fairness while maintaining operational agility is a delicate balance that demands both policy clarity and technological support.
Christopher Pappas
Founder, eLearningIndustry
Christopher Pappas
Once overtime pay policies change updates to HR systems will be necessary and most organizations will not be used to that.
Whether it is payroll software or time tracking software even a small hiccup with an automating system can create a domino effect that leads to multiple incorrect paychecks.
HR teams often work in partnership with IT in order to make sure everything is working correctly beyond just the technical aspect, this is a full cross functional project.
This becomes difficult because of the expectation that all systems will continue to run without any issues.
The HR Spotlight team thanks these industry leaders for offering their expertise and experience and sharing these insights.
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