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How Will Expansion of Overtime Eligibility Impact Small Business?

by Andrew SzczesniakMarch 26, 2014 10:47 AM

According to a recent article in Bloomberg’s Business News, HR departments are going to become increasingly busy over the next 12 to 18 months.  Why?  Because of a recent memorandum that was issued by the White House to the Department of Labor to “modernize and streamline overtime regulations and make more workers eligible under federal law.”

Burning the midnight oil might be more valuable for salaried employees in the near future.

Burning the midnight oil might be more valuable for exempt employees in the near future.

At the base of this memo is the administration’s desire to transform employees exempt from overtime hours (salaried employees mostly) into non-exempt employees.  This will have enormous financial repercussions on businesses everywhere.  If a salaried manager is working 50-60 hours/week and suddenly becomes a non-exempt employee, one of two things will have to happen.  The employer will have to either cut that employee’s hours to save money (making him/her less productive) or will have to swallow the increased costs associated with more overtime.  A third option would be to hire additional help, potentially adding additional employee-related costs.

Unlike the initial rules for the Affordable Care Act, there is no exemption based on a company’s size.  This could create extra pressure on small businesses.  Not only would there be the cost of additional overtime, but there would also be the additional costs associated with the auditing employers will have to undertake to make sure they’re compliant with the new regulations.

Of course, larger employers already have many of the mechanisms in place to take on this added regulatory burden.  What about small businesses?  Where can they go for help?  

You guessed it. GMS. Give us a call at 330-659-0100 or contact us online to learn more.

 

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