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Small Business Advice On New Proposed Overtime Rules

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Business rules and regulations are always changing. It’s our job as business owners to keep up with regulatory changes to stay compliant and protect ourselves from fines and missed deadlines. This article and the reason we post articles is to keep you informed of what the recent changes are and how it’s going to affect you. 

This article addresses the small business advice on the recent changes that affect overtime rules and it’s affect on small business operations. 

If you haven’t heard already, the FLSA (Fair Labor Standards Act) has come out with some changes to overtime rules and how it applies to executive, administrative, professional, outside sales and computer employees.

These modifications could impact you if you are a small business owner and you will want to be prepared on how to react to these changes.

According to a blog article published by Stefan Schumacher on THE PAYROLL BLOG, the new rules address salary thresholds for white collar workers to be considered exempt from overtime. Here are some of the ranges:

  • Weekly salary to be considered exempt would go from $455 to $921 – and this could go up to $970 or an annual salary of $50,440 per year by the time the rule is final.
  • For highly compensated employees, they would have to earn $122,148 annually to be exempt from overtime, as opposed to the current level of $100,000.
  • An automatic system would be put in place so the salary levels go up in accordance with the economy.

– See more at: http://blog.surepayroll.com/how-to-handle-the-new-proposed-overtime-rules/#sthash.eZ5YvtUI.dpuf

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How can you prepare as a small business owner for these changes?

Really, just knowing more as a business owner prepares you for changes like these. However, we can recommend a few action items that can better address what you should be doing. 

According to an article posted by SHRM (Society For Human Resource Management), there are 5 ways you can prepare for overtime changes:

  1. Review your job descriptions and make sure they are accurate. Do they reflect job duties and reflect responsibilities in those roles? Can you easily identify why this position should be exempt?
  2. If you have positions that fall in the “gray zone” of exempt or non-exempt, work with your HR manager to manage salary and activities that may require any re-classifying needed.
  3. Communicate to your managers that these changes are coming and how it will impact them. Because these are proposed changes, it is likely that there will be congressional push back. However, being proactive can eliminate any business interruptions that might take place. 
  4. Work with your HR team to develop plans on how to deal with needed salary adjustments to keep employees in their classified exempt or non-exempt status. For instance, if there is a need to increase salary thresholds for exempt status, how will you respond?
  5. Also develop work schedules and pay rates for these newly classified exempt or non-exempt status employees. Will you pay hourly or use a salary plus overtime model? If your employee worked a 45-50 hour work week, will they continue to work those hours and now receive premium overtime pay based on a new pay rate schedule?

If you take the necessary steps to measure out how these changes affect your team now, you can avoid business interruptions and mitigate loss of production or workforce impact. If you need any help in working with these changes, please make an appointment with one of our HR specialists for a complete analysis. Contact us here

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LUXA Enterprises specializes in hrm services, outsource accounting, and payroll services . We match up with ideal candidates for services by allowing small to mid-size businesses increase focus on their growth through outsourcing. If you want to know how we can help you, contact us today!

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