Recent changes to Federal Overtime Rules are taking small business owners by surprise and will force many to change their payroll operations. The change, which was announced on May 18, will go into effect on December 1, 2016 and expand overtime protections to an estimated 4.2 million workers.

The new rule changes overtime regulations under the Fair Labor Standards Act’s minimum wage and overtime productions. Before the rule, employees were excluded if they were salaried, earned at least $455 per week, or were in positions considered executive, administrative or professional. Now, the pay threshold for overtime protections will be raised to $913 per week.

For small business owners, this means that any employees who do not make at least the threshold salary and classify as exempt are entitled to time-and-a-half pay after they’ve worked 40 hours in a week.

To avoid paying the time-and-a-half, the most obvious choice for small business owners is to limit employee hours to 40 and under. The other option would be to raise employees’ salaries beyond the new threshold, in which case employees would no longer qualify for overtime protections.

The attorneys at Skeeters, Bennett, Wilson & Pike want to make sure you are prepared for the Federal Overtime Rule Change coming in December. If you have any questions, don’t hesitate to contact an attorney.

Source: Business News Daily