Small Businesses Struggle With Pending Changes to Overtime Law

Posted by Edward Sharkey on Wed, 10/05/2016 - 04:00

Small businesses are running out of time to become compliant with the new overtime rule announced by the Obama administration last summer. The Department of Labor has confirmed the rule, making it final, and it will go into effect on December 1. The National Federation of Independent Business (NFIB) is pushing for a delay, contending that many small businesses are not ready.

Despite NFIB's contentions , the Department of Labor believes six months is enough time to prepare. Twenty one states disagree.

The new rule raises the salary ceiling for eligibility to receive overtime pay from $23,660 per year to $47,476 per year. It is expected to expand coverage to 4.2 million new workers. This leaves small business to figure out how to become compliant.

NFIB has identified several ways small businesses are choosing to respond to the requirements:

• Convert salaried workers to hourly, track their hours, and then absorb the overtime costs;

• Limit workers' hours to 40 hours per week and bring in part-time employees to make up for the lost productivity;

• Cut workers' base pay to offset overtime expenses;

• Raise employees' salaries to avoid the overtime costs.

Small businesses are going to have to figure out their preferred solution quickly. The Department of Labor shows no signs of slowing down the implementation.

Call Today (301) 657-8184

 Google+  View Edward Sharkey's profile on LinkedIn