The new overtime laws may confuse a lot of business owners and employees. These new laws take effect on December 1st, 2016. The new rules move the overtime threshold up to $47,476 annually. This is meant to protect workers that earn higher salaries.
The new challenges for businesses spread across a wide variety of different markets. Workers who are on duty sporadically will now be compensated for their extra time. The new threshold will likely affect more managers and mid level employees. This may seem like a boon for the middle class, but corporate offices and small businesses both need to find ways to cut their own employment costs. Too many variables come into effect for all of these businesses to adopt a singular solution. An employee who quits without notice may put strain on a business to make a hired employee work additional hours.
The natural solution would seem to be simply rigging it so that enough employees are scattered to work across the current overtime threshold. This may not work because the new overtime laws apply to salaried workers. Things get more complicated when you consider the fact that many states have right-to-work laws. A skilled business owner may be able to use the laws in a state like Florida to his advantage.
Businesses may still want to give quality employees an incentive to work at a salaried rate. The solution here is also very simple. Tell employees that they are on the books for a lower wage, but guarantee them a certain amount of weekly salary. This will allow the business owner to hire new employees as though they were salaried under the old overtime laws. This will also help you to retain employees who now need to be paid salaries that are too high under the new laws. The new pay laws are still very similar to the old laws. Pay employees time-and-a-half equal to the amount that you would have been paying them under the old laws. Just be sure that the overall hours add up to the same amount on the books.
A third solution may simply be a reorganization of structure within a business. Hiring someone within a higher salary range to do a wider range of skilled work may be preferable. One study showed that McDonald’s employees that were paid fifteen dollars per hour demonstrated a much higher quality of service. You may prefer to hire a smaller number of more skilled employees.
December is right around the corner. Contact Stephen Koppekin if you’d like to discuss employment matters in more depth. As the founder of Koppekin Consulting, Inc, Stephen is happy to help you navigate the challenging issues that the employment landscape faces today.