Small business owners often operate on a tight budget, and often depend upon staff members to pull their weight as the business grows. Unfortunately, new rules on overtime pay have made life very difficult for small business owners by leaving them with a difficult choice on how to handle staffing issues while staying within their budgets.
Whatever option the owner of a small business pursues in light of what amounts to a substantial raise for many workers, it is important to know the law.
Failure to comply with overtime rules can have serious consequences for companies. A business law attorney can offer guidance to companies on their new obligations to pay overtime to many more workers than in the past.
New Overtime Rules Raise Challenges for Small Business Owners
Houston Chronicle reported on the impact that the Department of Labor's new overtime rules are having on small business owners. The DOL changed the threshold under which salaried workers have to be paid overtime. Previously, a worker could be exempt from overtime if he was paid a salary and he or she earned at least $455 per week. While there were certain other requirements for an employee to be considered exempt, this dollar amount was a reasonable one which made it possible for companies to depend upon salaried workers to pick up the slack when extra work needed to be done.
Now, however, the new DOL rules say a worker has to be paid overtime unless his salary per week is at least $913. This is double the previous salary threshold. When computing annual pay, it now means a worker who makes under $47,476 has to be paid overtime for working more than 40 hours per week. Under the old rules, a worker who met the criteria could be exempt from overtime if he or she was paid a salary of at least $23,660.
For companies which depend upon low-level managers and other salaried workers to put in a few extra hours a week when needed, this is a huge change that could have a potentially detrimental impact. Those in the retail industry, hospitality industry, restaurant industry, moving industry and landscaping industry may be especially hardest hit by new regulations.
Faced with the potential for more required overtime payments to salaried workers, many businesses may be forced to switch those salaried employees to hourly work and to cap the number of hours they can work over the course of the week. The result could be less money in the pockets of these workers, rather than more money as DOL intended. The result could also mean everyone has a higher workload as they all scramble to get things done in the time allotted.
Companies need to be aware of the new rules, comply with them, and make smart and strategic plans for handling staffing issues in light of this fundamental change. A business law professional can provide guidance on the new requirements and assistance on making the best choices for staffing going forward.
Contact a business law attorney if you believe your organization needs help. Call Brewer & Prichard P.C. today at 800-445-8710 or visit https://www.bplaw.com to schedule a consultation. Serving Houston, Montrose, Galveston Island and surrounding areas