Menu

overtimepay

New DOL Overtime Rules: Top Implementation Challenges Across Industries

by

New DOL Overtime Rules: Top Implementation Challenges Across Industries

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
COO, Raindrop Agency

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
CEO, Dog Academic

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
CEO, QR Codes Unlimited

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
CEO, Poggers.com

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.

Do you wish to contribute to the next HR Spotlight article? Or is there an insight or idea you’d like to share with readers across the globe?

Write to us at connect@HRSpotlight.com, and our team will help you share your insights.

Recent Posts

Overtime Overhaul: New Rules, New Challenges

by

Overtime Overhaul: New Rules, New Challenges

The U.S. Department of Labor’s new overtime rule represents one of the most significant compensation shifts in years. 

By dramatically raising the salary threshold for exempt status under the Fair Labor Standards Act (FLSA), the rule reclassifies millions of American workers, making them newly eligible for overtime pay.

For HR teams, this is far more than a simple compliance update; it’s a massive operational challenge with deep financial and cultural implications. 

The hurdles of implementation vary widely across industries—a tech startup with a flexible “always-on” culture faces a different set of problems than a retail chain with thousands of store employees whose duties must now be meticulously tracked.

Navigating this transition successfully requires foresight and a clear understanding of the potential pitfalls. 

To gain on-the-ground perspective, we turned to a panel of seasoned HR experts and business leaders from across industries with one critical question:

“As HR teams update overtime pay compensation in light of recent legislative updates, what is one implementation challenge they could potentially face in your industry?”

Their insights serve as an essential guide for any organization working to align with these new regulations, revealing the key challenges and strategic considerations for a smooth and compliant transition.

Read on!

Martin Weidemann
Owner, Weidemann.tech

Martin Weidemann

One of the biggest implementation challenges is adapting legacy payroll systems to handle nuanced, real-time rule changes across multiple jurisdictions—without disrupting operations.

In my own companies, which span across fintech and luxury services in Mexico, this became clear when managing a team with hybrid shifts, bonuses, and on-call structures. Many payroll platforms simply weren’t built for dynamic rules tied to hours worked, variable rates, or multi-role staff.

What made it even more complex was the communication gap between legal updates and HR tech—compliance would change, but systems lagged behind. We had to bridge that manually, often by updating spreadsheets or APIs on the fly. It’s not just a technical issue; it’s an operational one that impacts trust, accuracy, and morale. And for industries that move fast, like tech or aviation, lagging here can mean real legal risk.

Joe Spisak
CEO, Fulfill.com

Joe Spisak

One significant challenge HR teams in our industry face when implementing updated overtime pay regulations is managing the cost implications across a diverse workforce with varying seasonal demands.

In the 3PL world, we operate in an environment where peak seasons can require substantial overtime hours from warehouse staff. The recent increases in salary thresholds for exempt employees—moving from $684 to $844 weekly, and eventually to $1,128 weekly—create a complex reclassification puzzle that affects operational planning.

I’ve seen firsthand how this impacts our partners. A mid-sized 3PL we work with recently had to reclassify nearly 30% of their warehouse supervisors as non-exempt, dramatically changing their labor cost structure. Their HR team wasn’t just dealing with payroll adjustments—they were navigating employee morale issues as formerly salaried staff adjusted to punching time clocks.

The implementation challenge extends beyond paperwork. It requires recalibrating entire workforce management systems, especially when dealing with seasonal volume fluctuations. Many 3PLs have traditionally relied on flexible overtime arrangements during peak periods, and these regulatory changes force a fundamental rethinking of staffing models.

What makes this particularly challenging is the timing—these changes are hitting during a period when fulfillment operations already face margin pressure from rising carrier rates and warehouse space costs.

For HR teams, it’s not simply about compliance; it’s about implementing these changes while preserving operational efficiency and maintaining service levels for eCommerce clients who expect consistent performance regardless of regulatory shifts.

The most successful implementations I’ve witnessed involve HR partnering closely with operations to model different workforce scenarios, using data analytics to predict impact points, and creating clear communication channels to help employees understand how and why their compensation structures are changing.

Chris Brewer
Managing Director, Best Retreats

Chris Brewer

In the wellness retreat industry, one big challenge HR teams face updating overtime pay due to 2024 FLSA changes is reclassifying exempt employees to non-exempt. Many retreat staff, like facilitators, were salaried above the old $684 weekly threshold but fell below the new $844 (July 2024) or $1128 (January 2025).

Tracking hours for these roles, often involving irregular schedules at remote sites, is a nightmare. I saw a Peru retreat struggle with this—staff felt micromanaged when asked to log hours, tanking morale. Advice? Use simple time-tracking apps like Toggl and train managers to communicate the change as a fairness win, not a demotion.

Andy Danec
Owner, Ridgeline Recovery LLC

Andy Danec

One of the biggest implementation challenges we face in the addiction treatment industry when updating overtime pay policies is balancing compliance with continuity of care. At Ridgeline Recovery, our team operates 24/7. Clients don’t stop needing support just because the clock hits a certain hour. That means our counselors, support staff, and medical team often work odd hours, weekends, or get called in during emergencies.

With new overtime legislation, HR teams must rethink scheduling, payroll structures, and staffing without disrupting client care. The problem? You can’t always predict how long a crisis will last. Forcing strict cutoff times or limiting hours to control costs can create gaps in care or lead to burnout if team members feel like they’re being micromanaged around the clock.

We addressed this by investing in better workforce management software—real-time tracking, clear overtime alerts, and smart scheduling based on actual demand. But the real shift was cultural: making sure our staff understood their rights, our obligations, and that any changes in policy wouldn’t compromise the mission.

HR must walk a tightrope. You have to stay compliant, yes—but in healthcare and recovery, you also have to stay human. That’s the challenge.

Joel Miller
President, Miller Pest & Termite

Joe Miller

One big challenge I’ve seen firsthand is adjusting overtime policies for employees who split their time between roles that do and don’t qualify for overtime.
We encountered this issue at a field services company, where some team leads were hands-on in the field part of the week. The rest of the time, they handled scheduling and reporting.

When the new rules took effect, HR had a difficult time determining when those employees were eligible for overtime and when they weren’t. It was a tracking nightmare and led to some underpayments early on, which we had to correct.

We eventually moved to a time-tracking system that let employees categorize their hours by activity type, but even that took weeks of training and buy-in. The key learning was that compliance isn’t just about updating policy—it’s about making sure the tools and behaviors on the ground support it. You can’t rely on memory or assumptions when classifying labor anymore. To stay ahead of these changes, you must design your workflows to reflect the law, not the other way around.

Derek Emery
CEO, Cash For Cars Los Angeles

Derek Emery

Being the CEO of Cash for Cars Los Angeles since 1999 and having a 30-plus years of experience in the sphere of business and finance, I have noticed that the HR teams working in the sphere of automotive services have a peculiar problem with adjusting to the new policies of paying overtime: matching the inflexible legislative system with the anarchic pace of the industry.

Our industry is driven by uncertainty unlike the predictable office settings, seasonal peaks (e.g. holiday vehicle sales), post-disaster sudden rise requests, and inventory cycles that rise and fall.

As an example, customer traffic can repair suddenly and double because of one hailstorm, and technicians have to work long hours.

However, new overtime regulations offer tight limits on the number of hours as well as complicated payments calculations, which presents a paradox: limit overtime to meet the regulations, and lose income during busy periods; be flexible, and watch labor costs spiral.

The other potential obstacle that has been ignored is the fragmented workforce in our industry. The auto service positions, techs, sales people, detailers all have different pay structures (salespeople get commissions, mechanics get piece rates).

It is a minefield of compliance to design overtime policies that reasonably take such disparities into consideration.

A survey by the Automotive Service Association (2021) found that 38% of companies are having a hard time retaining skilled technicians; errors in pay transparency may help speed up the process.

Workers may leave in anticipation in case they dread earning less income in the event of new regulations, thus incurring fewer hiring expenses than the cost of conformity.

Finally, there is the integration of technology that makes it difficult. Automation increases efficiency, but watching over AI-generated diagnostics or answering customer portal requests after hours erases the distinction of a regular workday.

Defining overtime applicability to hybrid jobs (ex: a technician who manages robotic repairs) requires imaginative resolutions- something that HR departments seldom have to deal with in non-tech intensive sectors.

Workforce planning, flexible scheduling software, and honest communication are not negotiable when it comes to handling these legislative changes without compromising the quality of service and staff morale.

Mark Niemann
CEO & Co-Founder, MeinOffice

Mark Niemann

One key implementation challenge HR teams may face when updating overtime pay stems from the complexity of aligning compliance with operational agility, particularly in industries like ECommerce and tech-driven services:

Varying job roles: The rapid evolution of hybrid roles in marketing, content creation, and customer experience makes classification under new wage regulations harder.

System integration: Legacy HR and payroll systems often lack the flexibility to adapt quickly, leading to delays or inaccurate calculations.

Talent retention risk: Sudden compensation structure changes can affect morale or prompt dissatisfaction if not communicated transparently.

To mitigate these, it’s essential to:

  • Conduct job audits to clearly define exempt vs. non-exempt roles.
  • Upgrade digital tools for real-time compliance tracking.
  • Proactively communicate policy changes to build understanding and trust.

Andres Bernot
Founder, WOW! Shirts

Andres Bernot

HR departments in the clothing trade encounter a problem linking changes in overtime compensations with varying production patterns in the light of new laws.

We are selling shirts, we work with made-to-order, custom design, so we can rapidly increase workload, especially when there is a seasonal trend.

For example, when some new design is popular we usually have many orders that need overtime. Compensating in such peaks may be complicated.

Without a swift response and clear communication of changes by the HR teams, employees could develop a belief that the system is not fair, which can be dejecting.

To manage that, the HR needs to juggle between the legality and the effective communication so that the employees could feel appreciated and so that there would be no kinks in the working process at such crucial times.

Dr. Kirk Adams
Disability, Equity, & Inclusion Advisor, Innovative Impact LLC

Dr. Kirk Adams

When HR gets overtime policy wrong, it’s not just a payroll issue. It’s a people issue.

Employees with disabilities often work under modified schedules. Some share roles. Others use assistive tech.

These accommodations change how hours get tracked. But most systems weren’t built for that.

They miscount hours. They miss productivity. And they cause underpayment.

Not because of bad intent but because of bad design. That’s where trust breaks. That’s where legal risk grows.

HR leaders must act. Train your managers. Choose systems that flex. Bring in experts who understand disability inclusion.

Compliance is the floor. Equity is the goal. Leadership means knowing the difference and doing better.

Hayley Gillman
CEO, BOTI

Hayley Gillman

The main obstacle for HR teams extends beyond numerical challenges because it involves dealing with human aspects of organizational change.

The change from exempt to non-exempt employee status affects payroll operations while transforming employee perceptions about their work responsibilities. The shift in tracking work hours creates a sense of micromanaging for employees who previously enjoyed flexibility in their work. When communication about compliance updates is not handled properly the process transforms into a perceived demotion for employees.

The key? The solution requires organizations to modify both their policies and employee attitudes. The explanation should include both legal requirements and fair pay principles and employee protection aspects. Managers need training to conduct these conversations while showing understanding toward their team members. Organizations should spend money on tools that provide smooth time tracking experiences instead of creating overwhelming situations.

The actual expense of overtime updates exceeds monetary costs because it damages employee trust.

The HR Spotlight team thanks these industry leaders for offering their expertise and experience and sharing these insights.

Do you wish to contribute to the next HR Spotlight article? Or is there an insight or idea you’d like to share with readers across the globe?

Write to us at connect@HRSpotlight.com, and our team will help you share your insights.

Recent Posts