By: Ginger Willinger, Partner of Camino Financial
Editor’s Note: Camino Financial is online marketplace that evaluates businesses and matches them with non-bank lenders. Different from a bank, the Company focuses on lending to small businesses seeking $5,000 to $500,000 in debt financing, and can fund a loan in as little as four days. For more information visit:www.caminofinancial.com
I know, I know, another new law? With the labor laws constantly changing it’s hard to keep up and sometimes they become white noise. This law, however, is affecting 4.2 million people across the US. It cannot be bypassed and is going into effect December 2016.
So What Is It?
The new law is increasing the minimum salary threshold for employees who are exempt from overtime pay. The Department of Labor is enacting the regulations as part of the Fair Labor Standards Act. The new minimum salary requirement is $47,476. That’s an increase of over $20,000 the current federal minimum!
So What Should I Do?
If your company currently employs salaried workers making less than $47,476 you have 2 options.
Option 1- Change your exempt salaried employees to non-exempt hourly employees and track their overtime hours. The overtime rate is 1.5x the regular pay.
Option 2- Increase salaries to $47,476
So What are the Tips and Tricks?
Tip 1- Act early! Weigh the cost of each option to choose the right path for your business and start making changes now. No one wants to find out too late that they made the more costly choice because of a time crunch. Also take time to put timekeeping solutions in place and update employee handbooks if needed.
Tip 2- Create a company policy that requires employees to get prior approval for working overtime and put it in your employee handbook.
Tip 3- Shift job duties from an overworked employee to another part-time employee, or hire another part-time employee to avoid overtime accrual.
Tip 4- Have a meeting with the employees this law is affecting and explain to them the reasons for their pay changes. Changing a salaried employee to an hourly employee can be perceived as a demotion. Make sure your employees are in the know and are confident that the pay change is not a reflection of their performance.
Tip 4- Consult an HR professional before classifying any employee as exempt. To be considered exempt, employees must meet certain requirements regarding their job duties.