You must have already noticed the ongoing commotion caused by the implementation of new overtime rules under the Fair Labor Standards Act. There are various proposed rule changes that might impact you as a small business owner, and you will want to be prepared for it. Basically, the new rule changes are designed to address certain salary thresholds that are necessary for considering white collar workers to be exempted from overtime pay.
What is the Fair Labor Standards Act?
FLSA is an employment framework that many people take for granted. The act was passed in 1938 by Congress and was signed by the President of the United States. The act introduces a seven-day work week of a maximum of 44 hours. The act also prescribes standards for overtime pay and basic minimum wage, which affects most public and private employment. Employers are required to pay covered workers who are not exempt from the overtime pay rate, which is one and a half times the rate of their regular paycheck, and the federal minimum wage.
What are the salary thresholds that are being addressed?
First, an automatic system will be implemented to allow salary levels to scale accordingly with the changes in economy. Secondly, employees that are considered to be highly compensated will have to earn up to $122,148 per year to be considered exempt from overtime pay. The current level that they need to reach is only $100,000. Finally, the weekly salary to be considered exempt will now be $921, as opposed to the current level of $455. By the time the rules are finalized, the level could go up to $970 or $50,440 for annual salaries.
How should you prepare for these overtime rule changes?
As many business owners are anticipating these proposed regulations to be issued soon, it is pertinent that you prepare in the best way possible. The more prepared your company is, the easier it will be able to make adjustments accordingly. Here are five important steps to keep in mind when making preparations for your business:
- Take time to come up with a strategy to establish work schedules and pay rates if an employee is slated for conversion from an exempt status to non-exempt status
- Devise a contingency plan for potential changes you will make in the event of a raised minimum salary threshold
- Ensure that all managers and supervisors are aware of the new regulations. They too must be well-prepared for the changes that are sure to be implemented
- Carefully identify exempt and non-exempt positions, especially those that may fall into a “gray area”
- Review all the current job descriptions of your employees and ensure these documents accurately describe their corporate responsibilities.
As you will need a substantial amount of data to prepare for the upcoming changes in the regulations, you will require reliable tracking software to track your employees’ attendance and the total amount of working hours they clock each week, month or year. With the TRAXTimeCard System from TRAXPayroll, you will be able to monitor overtime hours much more efficiently and managing your costs is a breeze. Your employees will also have access to the relevant information when they want to know how many hours they have worked and what they are entitled to receive.