Overtime Rule For Business Owners - What You Need to Know
Currently the Department of Labor’s Overtime Rule is on hold.
Initially scheduled to be in effect on December 1, 2016, the new regulation was intended for businesses that earn $500,000 or more in annual gross sales or revenue.
Should it become effective, the Overtime Rule greatly expands eligibility for overtime pay under the Fair Labor Standards Act. Though it does not change job duties test for salaried employees including those in executive, administrative, professional, outside sales and computer employee positions, it does vastly increase the financial threshold to qualify.
Nationwide, this employer regulation is expected to affect 4.2 million workers age 16 and older in the first year.
Employers will need to be prepared for these changes or likely face steep penalties for noncompliance, back pay, and unintentional mistakes.
What can employers do to ensure they are complying with the Overtime Rule in the likelihood that it will become law?
- Assess the impact the new regulations will have on your business.
- Review overtime history at your company to determine the possible financial impact.
- Identify employees who will be most affected by this change.
- Determine if it will be beneficial to raise employees’ salaries over the threshold eligible for overtime pay (which will be $913 per week or $47,476 for a full-year worker).
- Determine if it will be possible to change employees who are already above this threshold to an exempt status.
- Consider investing in technology to help you better track overtime by employees.
- Look into technology such as apps or online entering of employee hours.
- Work with your payroll vendors to ensure timekeeping is accurate and automated to avoid errors.
- Consider utilizing timekeeping processes across multiple devices for employees.
- Communicate the new rules to employees and update your employee handbook.
- Consider limiting employees’ work hours to 40 hours per week.
- Review new procedures immediately and consistently to ensure compliance and to eliminate any errors.
- Monitor the financial impact to determine the best strategy for compliance for your business.
- Make changes if needed.
An employment lawyer or business lawyer can work with your business to ensure you are in compliance of the Overtime Rule regulations.
Your goal as an employer is to ensure regulatory compliance of the Overtime Rule and avoid costly penalties from mistakes or noncompliance. An employment or business law attorney at Murphy Desmond S.C. can assist you with this process.