Many of our clients are small, early-stage businesses in the process of creating their operational infrastructure. In these early, fast-moving stages of development, it’s not uncommon for a group of passionate workers and managers to help out with ad hoc tasks beyond their standard 40 hour work week. If this sounds like you and your company, take careful note: there are just 3 months left before new rules go into effect governing which workers are entitled to overtime pay, and these new rules could have a significant impact on your operations and personnel.
What are the New Rules and Who is Affected?
Earlier this year, the Department of Labor announced new rules expanding the threshold for workers eligible for overtime pay. Beginning this December 1, 2016, salaried workers and managers earning up to $47,476 will be eligible for time-and-a-half overtime pay for hours worked beyond 40-per-week. This cap (previously at $23,660) hasn’t been raised in 12 years, and the new rules are an attempt to catch up to the rise in the cost of living over the same period. It is worth noting that, under the new rules, this cap is meant to be reviewed and adjusted every 3 years, and the DoL estimates that the threshold will move up to $51,000 at the beginning of 2020.
What are your Options?
If you are expecting these changes to have an impact on your business and staff, you have three general options for managing the cost of a worker who was previously exempt from overtime pay:
- Raise the worker’s pay above $47,476
- Pay the worker time-and-a-half for extra hours worked in a week
- Cap the worker’s hours at 40-per-week and hire additional labor to cover the remaining hours
The best course of action will depend on the specifics of your business’ situation. Be sure to consult with your financial advisors to help you assess your specific situation and best accommodate the new rules.