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Now what? Business owners concerned amid new OT rule

No matter the size of their operations, no matter the services they provide, no matter the sectors in which they operate, all business owners must do everything in their power to ensure that their books remain balanced and every penny is spent with a purpose.

While this requires both diligence and discipline, it also requires a dedication to staying abreast of any and all developments in pertinent legal areas.

As such, it's likely that many business owners throughout the state of Georgia took note when the U.S. Department of Labor recently announced the adoption of a new overtime rule that is expected to extend overtime protections to roughly 4.2 million workers not currently eligible under federal law.

Indeed, many of them are likely wondering what their options are going forward.

The law as it currently stands ... and going forward

In general, federal regulations provide that all employees paid an hourly rate are entitled to overtime pay (time-and-a-half). Salaried employees are also entitled to overtime pay unless:

  • They earn more than a salary threshold set by the DOL, which currently sits at $23,660 per year, and;
  • They pass what is known as the duties test, which essentially demonstrates that their job-related responsibilities are executive, professional or administrative in nature (i.e., white-collar).

The new DOL rule dictates that starting December 1, 2016, the aforementioned salary threshold will rise to $47,476 per year, meaning the pool of workers eligible for overtime pay will expand considerably. Furthermore, the rule also calls for the salary threshold to be updated every three years.

Business owners do have options

While the rule has been lauded by employees and worker advocacy organizations across the nation, it has understandably left many business owners with questions about how to comply. Specifically, many are wondering if the only option going forward is to change all of their white-collar workers who currently earn less than $47,476 per year from salaried to hourly positions.

While this is certainly an option, business owners may ensure compliance in other ways. They can:

1. Continue paying those workers who will now be eligible under the new rule the same annual salary and overtime as necessary.

2. Raise the annual salary of workers to either at or above the new threshold to keep them exempt from overtime.

3. Assess hours, reassign staff and reallocate resources, such that white collar workers who fall below the new threshold no longer work more than 40 hours per week.

As perplexing as all this can be, business owners should note that the DOL did not change the duties test in any capacity. Furthermore, it also amended the existing overtime rule such that employee commissions and bonuses can be applied toward up to 10 percent of the salary threshold going forward.

If questions or concerns relating to the new overtime rules remain, business owners should give serious consideration to speaking with a skilled legal professional who can explain its applications, limitations and implications for operations.

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