The federal government has given small business owners another reason to closely monitor and track their employees’ hours. A new rule in the Fair Labor Standards Act (FLSA) beginning December 1, 2016 will raise the salary threshold of workers for which overtime must be paid.
In 2004 the Department of Labor required businesses to pay salaried workers overtime if they made less than $23,660 a year, making those workers non-exempt from overtime pay. The new rule will almost double this threshold to $47,476, resulting in more salaried workers eligible for overtime pay. Employees with salaries less than the new rate of $46,476 must be paid time-and-a-half overtime for every hour over 40.
An article in USA Today outlines ways companies might respond to this change. They could continue to pay the same salary and start paying OT. Or they could raise employees’ salaries to $47,476 to avoid OT. Another strategy is that employees could be instructed not to work overtime, and part-time workers brought in to cover the workload. Other businesses may cut the base pay of workers and pay OT in an attempt to keep paychecks at the same level. Finally, salaried workers could be converted to hourly.
However you slice it, small businesses will need to accurately and efficiently monitor and track the hours of their employees. We’ve explained before why handwritten time cards are a bad idea. If your small business isn’t using an automated system to gather employee hours, now is the time to start. For over 20 years we have provided business with a proven solution to control labor hours with our app-based and telephone timekeeping system.
Click here to start your free 30 day trial and get ahead of the December 1 deadline.