Overtime Laws Will be Changing Soon
Business owners that have employees understand that those employees represent their biggest expenses. When the right employee is on board, that employee earns the company much more money than trying to go without them, but they still end up costing a lot of money. It turns out that they may end up costing the company even more money if they are required to work overtime. Your payroll services specialist in Billings, Montana explains how.
Overtime Laws and Pay Back Then
It has been a little over a decade since the laws have been restructured, and many advocates think it is time to have them redone. This means there will be a big change.
The Fair Labor Standards Act has a certain set of rules when it comes to paying your employees. The laws, as determined in 2004, state that if you have an employee that earns less than $23,660 per year (based on 40 hours per week), they are non-exempt. You must pay time-and-a-half for any hours worked over and above 40.
Naturally there are some exemptions to that rule. Commissioned employees, salaried employees, drivers, babysitters, farm and seasonal workers, and a few others are not subject to those rules.
Overtime Laws and Pay Now
Sometime this month there will be some major overhaul of those laws. Instead of that $23,660 cap, many are pushing to move that to $42,000. But the idea is to make it a little more complicated than that. Instead of a single cap, it will be tiered and have 2 higher tiers.
What this means for business owners is that they have a couple choices. They could pay the overtime as necessary; they could salary their employees; or they could bump their employees up and over that $42,000 cap. It’s a decision that each business owner must make for themselves.
Nothing is completely set in stone, and even if the laws do pass sometime this month, we will have a little time before they fully go into effect. But it does mean that some businesses will need to make big decisions; those decisions could have a drastic impact on their employees. For instance, limiting the number of hours so there is no chance of overtime.
What You Can Do as a Business Owner
In order to prepare for these changes, and the likelihood of things changing is great (we just don’t know exactly what the changes will end up being), you need to do an audit of your employees and their hours. If your employees are regularly working over 40 hours per week, it may be advantageous to hire more employees to spread out the workload. If your employees are very close to that $42,000 cap, then perhaps it will be best to just give them a raise and push them over that line.
Practical Taxes can Help
Here at Practical Taxes we know the payroll structures, and we know the laws surrounding them. We are a full service accounting firm, and we are able to make sure that your business is functioning following all of the laws. If you don’t want to deal with any of these new laws, just let us do your payroll for you. You will be pleasantly surprised at how affordable it is. Give us a call today at 406-894-2050 to learn more.