Small Business Owners Not Aware of New Federal Overtime Rules, Impact on Payroll

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worker-squareThe U.S. Department of Labor is expected to release a new rules affecting overtime eligibility in May that will have a big impact on all businesses.

The pending FLSA (Fair Labor Standards Act) update will raise the annual salary floor for overtime-exempt, salaried employees from $23,660 to $48,000 or above (the final figure is expected in May).
Companies with salaried employees like assistant managers or office administrators face a tough choice: Meet the higher minimum salary, or switch certain employees to hourly pay with overtime.
Compliance is expected 30- 60, days after the rule change takes effect to comply.

Companies and Agencies that pay managers or administrative staff a salary (with no overtime) will likely see a jump in payroll when the rule change goes into effect.

The current weekly minimum for salaried, overtime-exempt employees is $455. That will increase to $921 a week for most full-time salaried workers when the rule changes this spring.

fundraiser-squareThe regulations that determine whether an employee is exempt or not are complex and in most instances need employers need the assistance of counsel in determining whether their employees are in fact exempt from the overtime laws or not. Many employers misclassify employees as exempt just because they receive a salary and perform non-manual work. This practice of misclassifying employees has led to a traumatic uptick in wage and hour litigation.

For example, many employers believe secretaries, assistant managers and other administrative professionals are exempt from overtime pay because of the “white collar” nature of their work. But those positions often fail to meet the labor department’s overtime exemption standards.

Employers who are audited by the Department of Labor have to pay back-pay if they are found in violation. Employers who are sued by disgruntled employees have to pay back-pay and the employee’s attorney fees if they lose in court.