Whether you are in charge of managing a small startup or a larger corporation, salaried workers and businesses will soon be subject to a change in laws of the Fair Labor Standards Act — the first change in 40 years. President Obama directed the Secretary of Labor to update overtime regulations so that workers who are working overtime are fairly compensated. The final rulings will go into effect on December 1, 2016, so your company needs to be prepared for the changes ahead. Here are some things you need to know about the upcoming overtime wage changes:
About the Overtime Wage Changes
The latest overtime updates are designed to extend protection to 4.2 million workers across the United States and the largest populations of these workers reside in California, Texas and Florida. Under these new rules, employees making less than $913 per week are now eligible to be paid overtime, wheras under the previous rules, employees making less than $455/week were eligible.
Employers are left to decide whether they want to increase the employee’s salaries above the new threshold or pay time-and-a-half for overtime work. All workers must not work more than 40 hours per week without adequate compensation and companies do have the option of modifying salaries and paying time-and-a-half for overtime.
Preparing for the Wage Changes
Employers still have a few months to prepare for the overtime wage changes which will effectually increase the number of workers at the company who are eligible for new protections. This means your company may need to review salary tables and job offers, restructure departments to accommodate for a new budget, and consider how they want to compensate workers who do end up working overtime.
One of the first things you can do is to classify all employees by salary and ensure that anybody making over the threshold is exempt from overtime pay if their primary job duties involve executive, administrative or professional duties as outlined in the final regulations from the Department of Labor.
Determining how many current employees at their current salary level would then be eligible for overtime protection will give you an idea of the potential changes in cost. Monitoring these employees’ hours and implementing measures of productivity can help to determine whether an employee’s position should be modified or salaries adjusted. You may realize that some accounting and finance roles will retire overtime — especially during tax season or other busier seasons — so the budgets will need to be adjusted accordingly.
If you need help with evaluating your staffing resources and exploring different types of positions in accounting and financing, get in touch with our award-winning team at Casey Accounting & Finance Resources for assistance. As a top financial recruiting firm in Chicago, we can help you prepare for any internal changes you need to meet the upcoming changes to the overtime threshold.