By John Swanciger of Manta
Last July, the federal government proposed a change that would double the annual salary threshold of employees who qualify for overtime from $23,660 to somewhere between $47,000 and $50,440. After almost a year of speculation and debate, the U.S. Department of Labor recently announced a final rule around expanded overtime pay.
(Photo courtesy of John Swanciger)
This revamp of the current overtime laws will have a notable impact on hundreds of thousands of U.S. small businesses and their employees. Despite this adjustment, many small business owners aren’t fully prepared to respond. A recent Manta poll found that 52 percent of small business owners were unaware of the proposed rule change.
With a major shift just months away (employers will have 60 days to comply), now’s the time for small business owners to educate themselves about the new overtime rule, assess how it will impact their labor costs, and identify ways to stay both compliant and profitable going forward. Here are three tips for getting started:
1. Review Your Employee Records
Manta’s poll also found that small business owners lack clarity on worker classification – 51% of respondents were unaware if their salaried workers are exempt from overtime pay under current regulations. Now is the perfect time for small business owners to sift through their employee files and confirm that workers classified as exempt are truly Plenty of employers mistakenly label employees as exempt simply because they earn a salary, but salary is a form of payment, not a qualifier for overtime wages. While sorting through these records, be sure to identify which employees already earn close to the new overtime threshold and how many overtime hours they clocked in the past year. In some instances, the most logical adjustment may be to raise specific employees’ salaries above $47,000.
2. Reassess Your Time-Tracking Tools And Processes
For employers who don’t opt to raise their staff’s salaries above the new overtime threshold, accurate time-tracking will be essential to staying compliant and managing labor costs. Relying on manual timecards or charts can complicate the process, making it difficult for employers to keep a verified log of employees’ hours. Small business owners should look into digital tools (potentially those that integrate into existing workforce management or scheduling platforms) that make time-tracking an efficient, painless process for all involved.
3. Explore Alternative Pay Structures
Small business owners have a variety of available options to choose from (each with their own pros and cons) in order to adapt payment models to the overtime change. Depending on your company’s overtime needs, switching to a modified overtime hourly rate or establishing a fixed wage for any time worked beyond 40 hours each week could be enough to offset any new expenses. Rather than change overtime wages, some employers may require that employees obtain supervisor authorization before working overtime at all.
Expanded overtime regulations are just one of many labor law developments affecting U.S. small businesses today. By getting ahead of new legislation and taking time to understand how these amendments will impact their individual operations, small business owners can put a plan in place that protects their companies and staff equally.
John Swanciger is a seasoned technology executive with vast experience in team building, product marketing and strategic partner development. As CEO, he leads Manta to strengthen its current offerings, while expanding products and services for a growing customer base of small business owners. John brings more than 15 years of industry experience working with high-growth business-to-business and business-to-consumer companies, including Accenture, Hotwire and Starwood Hotels & Resorts Worldwide, Inc. Most recently, he was responsible for product marketing, sales, business development and partner relations as Switchfly’s chief commercial officer. John is a board director at Liftopia and received a bachelor’s degree in finance from Boston College.
The views, opinions and positions expressed within this guest post are those of the authors alone and do not represent those of CBS Small Business Pulse or the CBS Corporation. The accuracy, completeness and validity of any statements made within this article are verified solely by the authors.