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Will the New Overtime Regulations Impact Your Small Business?

Original Source: Huffington Post on Aug. 10, 2015

Updated Aug. 24, 2020

Written by: Margaret Jacoby 

new overtime regulationsThe Department of Labor has been very busy this summer and revealed its new plans to change laws regarding overtime exemptions. Currently, employees who make over $35,569 a year or $684 a week and perform exempt duties do not qualify for overtime pay.

On July 6, 2015, the Department of Labor (DOL) notified the public of a proposed change in laws regarding overtime exemption, and this is expected to affect more than 4.6 million workers--including those who work at small business locations.

What's Going On?

In response to a September 2019 directive from the White House, the DOL has updated the overtime exemption regulations as applied to both job classifications and salary requirements.

Under the current laws, employees are exempt if they earn a minimum of $35,568 a year ($684 each week) and perform the duties outlined in the existing regulations--most of which are higher level tasks.

This change will make 1.3 million American workers newly eligible for overtime pay. In addition, the DOL is raising the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year.

The Department of Labor will be taking comments through September 4, 2015, and the final ruling will be in effect 30-90 days after it's issued. It is always possible that they could rescind the ruling--or discard it because of  a Congressional action--but it's currently believed to be most likely that some version of this updated rule will be put into effect, and be relevant as early as 2016. Businesses may need to consider new HR solutions to help deal with these changes.

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How Does This Affect Small Businesses?

One common trait of small businesses is the willingness of employees to work long hours in order to make a project succeed--and overtime pay can become a real factor here. This gets even worse if there's a problem like a personal crisis--even if you prepare for that, overtime rules may go into effect when others pick up the slack.

You'll also want to consider whether or not money is a good motivator--not all employees at a small business want to have a lot of overtime. Reviewing your employees' motivations will be important in redesigning workflows and assignments.

Oh, and it's not just the big businesses that need to pay close attention to changes in labor laws--every small business needs to understand the risks involved with noncompliance. It's often more cost effective for a small business to comply than to break the law and get caught doing so. Implementing sound HR solutions to stay on top of changing employment regulations and ensure you're doing what's best for the company is critical.

Ultimately, of course, the proposed regulations mainly affect businesses that have a lot of overtime hours--if your business only has three or four hours of overtime a week across all employees, then even the higher exemption limit is unlikely to cause much of an impact. On the other hand, if multiple employees are constantly staying at the office well beyond normal working hours, the new regulations could take a big bite out of your profits. You may find that is it more affordable to hire a new employee than keep paying overtime.

How EPAY Can Help

It's important that you prepare yourself for these potential overtime regulations.

How you tracking your employees time? EPAY's cloud based time and attendance system helps you factor in all applicable wage and hour rules, so you can proactively monitor your overtime compliance. Contact us to learn more.