The New Overtime Rule hits Small Businesses

Only an entrepreneur knows that to what extent employer laws can affect small businesses. The recent change which can give a jerk to the employer’s payroll budget is the new overtime rule. In order to survive and be on the same level, small businesses will now have to adapt and find quick and effective solutions for this new rule levied on them. The Department of Labour has classified the employees into two categories, the exempt employees do not have to be paid by their employer for the overtime they give into their workplace, on the other hand the employer will have to pay overtime for the overtime hours worked to a non-exempt employee. After the new law was introduced on the 18th of May, the Department of Labour changed the whole scenario for the small businesses, according to the new law now most of the employees will be non-exempt, just because the law has changed the white-collar exemption and which employees will receive overtime. The best company for SEO services in the U.S was also banged by this new overtime rule and to survive it enhanced the salaries of its employees. The new rule also highlights a qualifying factor to be called an exempt employee, and for that the worker must be paid more than the salary threshold. With this the salary threshold has risen to a great extent, and the increase is a little more than double the previous salary threshold.

It totally depends on the number of non-exempt employees a business has, that will determine the amount of impact of the new overtime law. However, non-exempt employees who will overtime for more than 40 hours a week, will have to paid overtime salary. Employers of the small businesses will either have to pay higher salaries or overtime wages to their employees. Here are a few options for the small businesses for handling the overtime rule changes :

  1. The first option can be by increasing the salaries of the employees above the salary threshold. If the employers increase the salary to make it go above the threshold, then they would be paying about $47,476 per year. This option will work in a beneficial way only for those businesses who are already paying salaries close to the threshold, so it won’t affect them much. There are businesses whose employees do a lot of overtime, and therefore the employers must definitely raise their salaries. The number of hours the employee overtimes and the increase in salary should be compared by the employer before he can actually decide that how he must adjust employee wages.
  2. The employee should be paid their overtime wages for sure, even if their salary is not increased. If the employee was paid his salary before the new overtime law, then he will be considered a non-exempt employee, and according the new law the employee must be paid one and half times more than their regular salary for any overtime worked by them. In case the employer does not want the overtime costs to add up, the employers can then cap the number of hours an employee can do overtime.

Due to the emergence of the new overtime laws, the small businesses will not have to manage the changes made to the law and they will have to take some sturdy decisions, so that the employees also get acquainted with the changes and there is clarity amongst the employer and the employees. Below are a few steps that can be followed bye employer to efficiently manage the changes made to the law :

  • The first and foremost step to manage the changes is to explain the employees about the new law and its effects. As an employer it is important to have a one-on-one conversation with the employees, because the changes in the law will not only affect your business, but will extremely affect the life of the employee as well. It is good to keep the employee informed about how the salary threshold works after the overtime changes. FuelOnline, who is the best SEO company in U.S., also held a meeting for all its employees to acknowledge them with the actual facts of the new law and its impacts also.
  • As soon as the employees become non-exempt with new salary threshold, it is essential to record the number of hours they have worked. Some employees might not be familiar with the timekeeping systems, and that is the job of the employer to make them familiar regarding that system and to keep track of the number of hours they work.
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