Can Your Income Statement Survive the New Overtime Rules?

In March 2014, President Barack Obama compelled his administration to expand overtime privileges to more workers. While the change is scheduled to happen this year, there is speculation that the final rule will go into effect on May 16, 2016, a few months earlier than planned; because if it goes into effect after May 16th, then the next President’s administration can repeal it through the Congressional Review Act.

Simply put, the new overtime rules increase the salary level exemption from $455 per week (or $23,660 per year) to $970 per week (or $50,440 per year). What this proposed change to the Fair Labor Standards Act (FLSA) means is that salaried employees who make up to $50,440 per year will be eligible for overtime pay. The United States Department of Labor estimates this change will affect at least five million workers. Furthermore, labor experts estimate that this change will affect 60 percent of businesses.

Therefore, the provocative question is, how will this impact your organization financially? You might need to consider converting some salaried employees to hourly workers. It might be more economical to raise some salaries above the $50,440 limit. Perhaps you want to review how employees are classified. Other considerations include implementing systems designed to track time more accurately, updating policies and procedures, and paying closer attention to unwitting time gobblers, such as meetings, answering emails at night and on weekends, and after-hours phone calls. The change might also reduce telecommuting opportunities.

White and Associates Group is well versed in the new overtime rules, and we are ready to advise you on the best strategy. Let one of our professionals offer sound financial advice and solutions to ensure your business survives this change intact. Give us a call today!