The federal government has given small business owners another reason to monitor and track their employees’ hours closely. 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. Businesses must pay employees with salaries less than the new rate of $46,476 time-and-a-half for every hour over 40.
An article in USA Today outlines ways companies might respond to this change in overtime pay. They could continue to pay the same salary and start paying OT. Or they could raise employees’ wages 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 to keep paychecks at the same level. Finally, companies could convert salaried workers to hourly.
However you slice it, small businesses will need to accurately and efficiently monitor and track their employees’ hours. 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 businesses with a proven solution to control labor hours with our app-based and telephone timekeeping system.
Start your free 30-day trial today and get ahead of the December 1 deadline.