How Overtime Rules Affect Your Small Business

 
New overtime laws went into effect at the end of 2016. Such laws can often have the biggest impact on small businesses, ranging from cost to implementation. So what does this mean for you, and what’s the best way to approach the changes?
 

 
The law

Make sure you’re aware of how overtime laws have changed. The Fair Labor Standards Act (FLSA) was first established in 1938 and established the minimum wage, as well as laws governing overtime pay and child labor. Employers are required to pay minimum wage for up to 40 hours per week and pay overtime if more than 40 hours are worked. The law applies to businesses that make $500,000 or more annually in sales. Changes to the law, which went into effect in December 2016, dictate that salaried administrative employees who make under $47,476 a year must be paid overtime, which is almost double the previous threshold of $23.660. This made approximately 4.2 million Americans eligible for overtime pay, who previously were not. The threshold will be adjusted every three years, with the first adjustment to come in 2020. Also, be sure to pay attention to state and local laws, which may have their own standards for overtime pay.

 
Salaries

With new laws requiring that more employees be paid overtime, you’ll need to evaluate what this means for the cost of paying your employees. You could keep employees’ salaries the same, but limit or reduce overtime, or if overtime is rare, continue as usual without any changes. Another option is to raise salaries to the new minimum, which would allow you to require unpaid overtime, or you could lower salaries to offset the cost of needed overtime, but remember that employees will not be happy with a pay cut. You could also hire more employees. If you’re particularly busy and overtime is frequent, more workers may help eliminate that need. Finally, you could convert salaried employees to hourly.

 
Cut costs

If you can’t increase salaries, nor limit overtime much, look at where you can cut costs to make up the difference, such as limiting bonuses and changing benefits.

 
Your employees

No matter which option you choose, be sure to discuss the changes with your employees. Make sure they’re aware of the changes to the law, what changes you’re implementing to comply and how those changes affect their jobs, schedules, duties, etc.

 

 
This article was written by Janelle Sheetz for Small Business Pulse
 

from CBS Chicago http://ift.tt/2zpmaGi