What Is the Latest Overtime Rule, and How Does It Affect Small Businesses?
This past May, the Obama administration outlined new policies affecting overtime pay for employees. Unlike other employment laws, many of which provide exemptions for small business workers, the new ruling will apply to almost all employees in the U.S.
As a small business owner, understanding the particulars of the law is crucial to protecting your companyâ€™s legal status â€“ and your own financial well-being â€“ in the coming months and years.
What the Law Says
As of Dec. 1, 2016, U.S. companies of all sizes will have to offer overtime pay to employees who earn less than $47,476 annually. This figure, which marks a significant increase over the previous salary threshold of $23,660, was set to equal the 40th-percentile salary for workers in the lowest-wage Census Region.
Companies will need to start tracking the hours of both managerial and non-managerial salaried employees carefully now to determine whether or not they qualify for overtime. Once the law goes into effect, employers will have to pay time-and-a-half for all hours worked beyond 40 hours per week.
To adjust to the new financial constraints, employers are choosing to alter their pay structures. While some businesses are increasing pay so employee salaries are above the new threshold, others are cutting hourly wages to minimize the effect of overtime hours on strained budgets. Â Additionally, some businesses are opting to cut hours to avoid having any one employee work overtime during a given pay period. Â You can learn more about the overtime law and its key provisions by visiting the United States Department of Labor.
Increased Costs for Small Businesses
Many small business owners worry that the change in overtime regulations will affect their bottom lines. While big corporations generally enjoy higher profits and larger lines of credit, small businesses have fewer funds on hand to fund new expenditures. Â For this reason, itâ€™s important that small businesses that will be affected by the new overtime laws start planning now.
Along with the bump in employee salaries, small to medium sized businesses could soon find themselves on the hook for higher payroll costs. If you currently pay an accountant to perform this task, you can expect to see the price increase in the coming months. On the other hand, if you handle your own payroll, expect to spend more time on this task moving forward.
Contact Accurants Today for a Free Trial
Founded with the goal of making life simpler for the average small business owner, Accurants is a one-stop tool for invoicing, time and expense tracking, project management, accounting, customer relationship management (CRM), and taxes. Additionally, you can use this cloud-based software program to track employeesâ€™ time or contractorâ€™s hours, making the payroll process run smoother and saving you valuable dollars.
Accurantsâ€™s time tracking solution has features to track hours against each project tasks, it has the built in checks & balances where it tracks the numbers of hours against the budgeted hours and timesheets once submitted to managers for approval are locked for editing. With overtime rule, small to medium sized businesses need web-based tools that has the features to track regular & over time hours.Â The report functionsÂ empower employers to view hours worked data by employees, projects, tasks & customers.Â Since Accurants is a completely integrated solution data from time tracker is immediately available across the suite for analysis & decision making.
To find out more about how Accurantsâ€™ time tracking & project management solution can work for you, sign up to try Accurants free for 30 days. Smarter accounting is at your fingertips.