New rules about federal overtime law have many businesses scrambling in order to learn what to do in the face of the new regulations. The changes in the law will now mean that tens of thousands of managers will become eligible to receive overtime pay for the first time in their professional lives.
When the new law takes effect, the minimum salary requirement will double from its current level to $50,000; possibly by as soon as the second quarter of this year. For those industries that have management staff at first and second levels that have so-called entry level salaries. This means a big increase for some companies, and smaller companies are going to feel these changes the most.
By mandating a pay level that is above current market rates, the impact on businesses in terms of overtime pay is going to be considerable. Some employers are being preemptive and converting supervisors from beings salaried to being paid at an hourly rate while others may raise the current rates of supervisors to near the new requirements. Other companies, however, have chosen to eliminate some supervisory positions and are opting to closely control hours worked by all employees in order to somehow lessen labor expenses in light of the new laws.
Even though salary minimums need some revision, doubling them all at once can be risky. The Fair Labor Standards Act (FLSA) has a long history of having done positive things in the world of work such as preventing child labor overworking employees without adequate compensation. Some labor standards enacted courtesy of the FLSA, however, are not as helpful.
By federal law, it is illegal to volunteer your time to a business and you must record even one minute of work done on your smartphone, for example. You are also not permitted to bank your overtime hours to use as future vacation time, nor can you, if you are a startup or new business for example, legally ask your friend to work for you with no expectation of pay. That’s the way it has been since the days of the New Deal under President Franklin Delano Roosevelt in 1938. The aim of the law was to make it so employers would be less inclined to work current workers too much by paying them overtime and encourage them to hire more workers. At that point in history, it was a very good idea.
The world has since changed quite a bit as has the FLSA. By the current set of rules that take up a great deal of paper, some employees such as teachers, newspaper deliverers, sugar processors and railroad employees are ineligible for overtime, while skilled construction workers, executive assistants, paralegals and other trades can receive overtime pay. How did that happen? Well, we have a history of lobbyists and political maneuverings to thank for the tangled mess that the FLSA can be at times.
Even though it can seem like an immense headache and hopelessly out of date, currently it is the law and failure to adhere to it can land a business in a great deal of trouble for non-compliance with the law. Even if the violation was because you were simply unaware, it pays to be informed because the penalties are significant even if didn’t violate the rules on purpose.
FLSA standards can be complex and confusing, so at EinsteinHR, we make it our business to know all of the laws that can affect you and your company. We can help you find the right person for the right job for your company’s needs. We can help you write the job posting, help you screen and interview candidates and help you write an offer including salary, benefits, and other compensation so that it fits your needs and is in compliance with federal law. Contact EinsteinHR today at 770-962-1700 to find out how we can help.