How The New Overtime Rules May Affect Your Business

The Department Of Labor is at it again, now changing the game for businesses as it pertains to overtime rules.   Since, that is what we really need . . . some more rules.  If it wasn’t challenging enough for small businesses dealing with making payroll and figuring out to maintain the costs of health insurance, now you’ll have to pay double attention to these new overtime rules which will become effective December 1st.

Here’s a bet I’m willing to make on the record.  The cost for businesses across the country to manage and track all of these changes will far supersede the benefits that will actually be paid for people working overtime.  The administration believes by making these changes that many hard working Americans will earn overtime, but let me clue everyone in on four your smart money moves secrets.

Right now, if you are a salaried worker who makes in between $23,660 and $47,476 and you have a reasonable level of “managerial” duties you are considered to be exempt status from overtime pay.   With the new changes brought about by the Labor Department, lower paid managers will be reclassified to something called non-exempt status which really means when they exceed the 40 hours in a given week they must be paid overtime.

So, what do you think small businesses will do in light of these new rules?

  1. They will keep extremely close track of hours.  Whereas in the past some of these managers worked 45 hours a week, small companies will have to spend more money and time tracking hours to make sure people don’t go over this threshold.
  2. Managers will actually get worked harder because your employer will give you a bump in pay to get you over the $47,476 threshold especially if you are close to the limit. Then, because they had to shell out more money for your job your duties will become even larger.  Congrats, now you have more work.
  3. Instead, this could this mean a pay cut on your base income.  To compensate for this new rule, your employer might actually drop you down a $1 or $2 in pay to make up for potential risk of overtime.
  4. Last, your hours may actually get limited by your employer.   If your status in the organization went from exempt to non-exempt, your employer might actually take away some responsibilities from you to ensure you don’t go over the eight hours in a day.

All this time I thought we were trying to increase productivity and growth for small business owners, and here is another rule coming down the pike to just make it harder for owners to focus on driving top line revenue.   Guess I’ll start working overtime.

Written by:
Ted Jenkin

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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express.  He is the co-CEO of oXYGen Financial.  You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin

About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves

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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

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4 Comments

  • June 15, 2016

    More time and money on hour tracking? And how’s that going to affect productivity?

  • June 23, 2016

    Sorry Ted your way off base with this one. While I’m usually not a fan of any kind of government intrusion into the private sector, this one is not a bad thing. My wife used to manage a gas station/c-store for a major oil company. Those poor folks were worked like rented mules. Most working well over 60 hours a week with no additional compensation. They were expected to complete their managerial duties and then run the register for a shift, to save on paying an extra employee. Employee calls off, no problem. The manager can cover. Mandatory meetings on Saturday… Etc. The new regulation will hopefully curtail some of these types of labor practices.

  • Ted Jenkin @ Your Smart Money Moves
    June 24, 2016

    Jonny – thanks for the comments. Going to be very difficult for employers and you’ll see major shifts to make sure they are clear on who is exempt and non exempt.

  • Ted Jenkin @ Your Smart Money Moves
    June 24, 2016

    Rich, I appreciate your comments and insight into this article. Since I own several companies, it is really tough line to draw. I know some people have abused this with their companies, but then consumers will wonder why prices and cost keep going up. The more work and cost they shove on small business, the more we have to increase prices.