How To Brace Your Business For New Overtime Rules Before Dec. 1

By John Swanciger of Manta

When the final rule for the new overtime regulations was announced in May, business owners could rest easily knowing they had months to get their compliance strategies in order. But now, time’s almost up.

The updated rule, effective Dec. 1, raises the threshold for time-and-half pay to employees who earn less than $47,476 per year, increasing the weekly salary qualification for overtime from $455 to $913. These changes are slated to impact more than 4.2 million workers, including many small business employees.

With December approaching fast, small business owners should have already outlined a course of action for complying with the new law — but research shows that many are unprepared. Nearly one-third of small business owners with employees that fall within the salary threshold are not actively creating plans to adapt to the overtime changes, according to a recent Manta survey. Many employees are also in the dark: An August Manta poll found 57 percent of small business employees who will be affected were unaware of the rule change.

A lack of preparedness and communication can have serious consequences on small business staffing and expenses, not to mention expose small business owners to noncompliance penalties. To complicate the issue, employers can’t rely on exemptions (many of which are industry specific and typically not an approved alternative for small businesses) to skirt the new rule.

But viable options do exist. Here are a few approaches small business owners can consider to maintain compliance without sacrificing profitability or productivity.

 

1. Follow The Rule And Pay Overtime

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The simplest approach for small business owners is to pay employees overtime per the new rule. Straightforward adherence is a solid option for businesses that contend with long hours only during specific seasons, like the holidays or back-to-school rush. That said, this route can take a financial toll on small business’s bottom lines if most employees tend to work more than 40 hours per week year-round.

 

2. Raise Employee Salaries Above The Threshold

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To minimize overtime payments, small business owners may consider boosting employee salaries above the $47,500 line. For certain workers whose salaries already float close to the threshold, a small raise now can eliminate the risk of incurring steep overtime wages later. Not only does this make payroll more consistent (and easier to manage), it helps small business owners avoid unforeseen overtime expenses during busier months.

 

3. Cap Employees At 40 Hours Per Week

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Small business owners can implement a strict 40 hours-per-week schedule cap to prevent employees that earn less than $47,500 annually from working overtime altogether. But this isn’t a “get out of compliance free card” — employers are still legally obligated to pay qualifying employees overtime and can’t claim a company policy as an exemption. To enforce shift limits, small business owners will need time tracking software to keep employees accurate and accountable. Employers may also consider hiring freelancers and seasonal or part-time workers to compensate for productivity lost by restricting hours.

 

Now’s the time for small business owners to seriously evaluate their labor needs and choose an overtime compliance approach that fits their company goals and budgets. Experimenting with FLSA overtime calculators or seeking out a labor employment lawyer are two ways to start weighing your options. Once armed with the right information and a sound plan, don’t forget to bring employees up to speed on the new rules and how internal policies will change accordingly.

We may be down to the wire, but with some thoughtful preparation, it’s still possible for small business owners to come up with overtime compliance strategies that benefit their people and their companies.

 

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.

 

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