On January 1st, 2020, a new overtime rule was implemented by the U.S. Department of Labor, which raised the salary threshold under the Fair Labor Standards Act (FLSA) from $23,660 per year, or $455 per week, up to $35,308, or $684 per week. This change means that approximately 1.3 million workers who did not previously qualify for overtime will now be eligible for overtime pay.
If you are a small business owner with new non-exempt employees, you must ensure that those workers are paid overtime if they work more than 40 hours in a workweek. Making changes is never easy. Luckily, there are several ways you can navigate these new overtime costs and, in the process, create a more efficient and stronger way of running your business.
Here are a few implementation strategies to help make the transition to having more non-exempt employees as seamless as possible.
One of the first things you should do is take a look at how many duties an employee has that’s impacted by the new overtime rule. Then ask yourself if their workload needs to be redistributed to other employees, so they are not working more than 40 hours in a week.
It is a good idea to also evaluate your current sick and vacation time policies at this time and consider changing how your employees accrue time off.
Next, you should review your hourly rates. Are they correct? There are two easy steps that you can take to ensure you’re paying employees the right amount.
Make sure that your new pay rate is higher than the minimum wage in your local area. If your calculated rate is lower, then you will need to adjust the employee’s hours or increase your labor budget.
By taking advantage of time tracking solutions, you can automatically track overtime for your employees. All you have to do is set their overtime type in the settings, and you will get alerts when an employee is about to reach the overtime threshold.
To determine whether or not you should raise salaried employees pay or decrease their hours, an efficient time tracking solution should be implemented into your business. Buddy Punch time clock software is a great tool that does just that.
With the Buddy punch app, you can prepare timesheets without a calculator and save hours of manual labor every pay period. The software automatically notates any errors that occur, such as an employee forgetting to punch out or employees punching in late. You can even calculate overtime directly within the app and address any errors automatically before exporting your time tracking information directly to a popular payroll provider such as QuickBooks without any data entry.
Using time clock app can also improve your business efficiency and reduce any errors that may take you out of FLSA compliance. Additionally, the FLSA requires all employers to maintain timecard records to ensure all employees are receiving the correct pay for the time they have worked, and Buddy Punch can store all of those records for you.
No matter the changes you decide to make, it is crucial that you communicate effectively to your employees to ensure they don’t have any negative feelings towards the newly-implemented strategy.
If you intend to move a salaried employee to an hourly setup, then make sure they’re aware that it is not a demotion. There may even be specific laws in your area that stipulate when you need to inform an employee of changes being made. So be sure to check with your local and state governments or consult with a labor lawyer.
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