On March 18th, 2016, the United States Department of Labor (DOL) made a huge announcement. This announcement is something that will affect both employees and employers, large and small. Put simply; the new rule change will expand overtime protection to approximately 4.2 million workers in the United States. Is the company handling your virtual bookkeeping services aware of this change?
The changes to the law were officially published on May 23, 2016, and are scheduled to go into effect on December 1, 2016. The new rule will change the way overtime regulations are handled under the FLSA (Fair Labor Standards Act)’s minimum wage and overtime protection clause.
Overtime changes affect many
In the past, there were exclusions in place that meant workers who were salaried, earned at least $455 per week and in executive, administrative or professional jobs may not have qualified for overtime (pay at time and a half the normal rate of pay when the employee works more than 40 hours in a week).
Now, that rate is raised to $913 per week (or $47,476 per year). That rate will be updated (probably raised) every three years.
For employees, this regulation adjustment is certainly a good thing. It means that they are less likely to be exempt from federal overtime laws and thus more likely to qualify for overtime (paid at time and a half normal pay).
Impact to small business
For small business owners, this change means there are fewer exemptions in place. More employees may likely qualify for time and a half pay after 40 hours per week. This could lead to a financial strain for some companies, especially those who are not expecting the changes. However, there are bonuses and incentive payments that can count for up to 10 percent of the new salary level, in certain cases.
Small business owners should take the time to identify which salaried employees will be impacted by these changes. When the identification is completed ahead of schedule, it may mean that changes can be made in how hours are tracked and pay is calculated—to assure no laws are broken, all employees are fairly compensated and so that your business isn’t hit with a significant financial burden when this rule change goes live.
With any substantial change of policy like this, it is vital to make sure your accounting and bookkeeping processes are being effectively managed. Keeping up with regulation changes like these are best left to a professional supplier well versed in small business financial matters.
Considering virtual bookkeeping services can be a great option, especially during a time of change. If you need some assistance with getting your payroll and other records in order, Financial Optics can help. Additionally, we can help you update any timekeeping policies and adjust training for non-exempt and newly exempt employees who now must track all hours worked, including those hours beyond 40 each week.
If you would like to learn more about what we can do for you in advance of the DOL change going into effect on December 1, 2106, contact Tim Sernett by email or by phone today at 913.649.1040. Call for a no-obligation conversation about these changes.