Should You Comply with New FLSA Overtime Rules?

By Lori Murray, Manta Contributor — December 6, 2016

With new overtime regulations on hold and future changes uncertain, small business owners are in limbo.

Big changes to the Fair Labor Standards Act (FLSA) were scheduled to go into effect on Dec. 1. But just before Thanksgiving, a Texas court issued a preliminary injunction putting on hold the implementation of the new overtime rule for salaried employees.

Add to that the uncertainty over any changes the Trump administration will make to the FLSA, and business owners are in a state of limbo.

For small businesses that have already adjusted payrolls to comply with the rule, it’s recommended that they “continue with their adjustments as this is only a temporary injunction and there is no way to know when and what the final ruling will be,” said Shanna Wall, labor law attorney for ComplyRight.

“If no adjustments have been made, they can put these changes on hold for now,” said Wall. “It is important that employers keep an eye on the current status of this litigation for any updates or changes and still be prepared with a plan to comply if necessary in the future.”

The new law applies to any business with at least two employees and annual sales of $500,000 or more. It nearly doubles the annual salary floor for overtime-exempt employees to $47,476, or $913 a week.

That means employers have a choice: Pay these workers overtime, increase their annual salary to the new minimum, or make sure they don’t work more than 40 hours a week.

Either way, small business owners need to comply with these regulations. Here are the three steps you should take:

  • Confirm the exempt or nonexempt status of your employees. Employees who receive less than $913 a week are considered nonexempt, and you must pay them time-and-a-half for any hours they work beyond the 40-hour work week. Employees who are paid more than $913 a week and categorized as administrative, executive or professional are considered exempt. The job descriptions of your nonexempt workers should be in line with their current responsibilities.
  • Make sure nonexempt employees don’t work overtime. Employees who fall under the threshold must be paid overtime when they work more than 40 hours a week. Now is the time to adopt a system for tracking employee hours. Any timekeeping method is acceptable as long as it’s complete and accurate.
  • Switch employees from salary to hourly as needed. In some instances, you will need to do the math to determine the most cost-effective option: raising an employee’s salary beyond the threshold or paying that person overtime. If hourly is the best option, make the switch as soon as possible.

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