There is a major shift coming to your business on December 1, 2016. Are you ready? New Fair Labor Standard Act rules regarding overtime become effective on that day. Here’s what that means for you.
Do the rules apply to me?
First, you should determine whether you are covered by the new rules. That requires answering two questions:
- Do you meet the enterprise test? Huh? Is that a Star Trek reference? No. The question is does your business have at least 2 employees and gross revenue in excess of $500,000? If yes, the new rules apply to you. If no, you still have to ask the individual test question.
- Do you meet the individual test? This question applies to each employee. Does the employee “engage in interstate commerce” on a “regular and recurrent” basis. Before you jump too quickly to “no” remember you are dealing with lawyers and the government. Their definition is broad. If the employee makes phone calls, orders supplies, or otherwise has any contact outside the state then they will meet the test. If they do then you need to examine whether the new rules apply to them by job function. If they do not then the new rules do not apply to them.
Are all my employees impacted?
Not, necessarily. The second thing you need to determine is whether each employee is exempt or non-exempt. There are several exempt categories which generally include executives, administrative, learned professionals, creative professionals and outside sales. Each of these have definitions and require a minimum salary of at least $913/week. The new rule will not apply to exempt employees.
If you have a non-exempt employee which are current hourly employees and current salaried employees without an exemption including inside sales people, then the rules apply. The new rules apply to any week in which an employee exceeds 40 hours of work. That is not an averaging test. If they work more than 40 hours they must be paid time and a half for overtime. If they are salaried, they must be paid a minimum of $47,476.
For many businesses this could be a real hardship. While 21 states have filed a lawsuit and the house has proposed a bill that would ameliorate this hardship, for now these rules must be implemented. Many businesses should review job descriptions to see if an employee can truly be classified as exempt. Other businesses may need to consider moving people to part-time. That might impact work flow and require some strategic insight from others to determine the best way to proceed.
Where can you find such strategic insight? At Christian Business Fellowship. A Christian Advisory Board is the forum to help process the best way of implementing or properly avoiding these new rules. Seek wise counsel from your group and let’s build our business together.
*Disclaimer. The information contained in this article is intended as information and not a substitute for specific legal advice.