Chat with us, powered by LiveChat

New overtime law for salaried employees…what does that mean for you?

New overtime law for salaried employeesLabor costs are one of the biggest expenses most businesses face. It can be a constantly moving target affecting your bottom line every month. Overtime has a huge impact on that bottom line, and now with new overtime laws undergoing change, it is vital you plan for what could happen in the second quarter of 2017.

In the past, the salary threshold for mandatory overtime was $23,660 a year or $455 per week; with the new law it will raise that number to $47,476 or $913 per week. To put that into perspective for your specific company, employees that were making $24,000 a year were not subject to the overtime law. If you have an employee making $500 a week, or let’s look at that hourly at $12.50 an hour; if they worked an extra hour a day to complete a task, you were paying $62.50 a week more. If the new law is implemented you’ll be paying $93.75, or $125 more a month – $1,500 more a year.

That will have a direct reflection on your profit and loss statement. What are your options? First is to support lobbyists trying to educate legislatures on how this will affect your business, there still is hope that the law will be stopped. However, you need to build a plan around this new situation if it does go into effect.

Start with a labor cost analysis tracking production and what could be changed to lower possible overtime. Sometimes what starts as a detriment can be turned into a leap forward. One change in a production procedure can often reduce wasted time that has been a drain on your company for years.

This is a process that must include the employees. If they are challenged and motivated to find a way to speed up their work load, they usually can find it. As an employer we can often forget that how much is done is not as important to the employee as simply getting hours in for the paycheck.

The two employee types are those that want to get the shift over and go home, and those who want a bigger pay check. Both can be motivated to help you with production. The employee who wants to get off on time will find that answer if motivated with perk’s such as vacation time and early time off. The overtime employee doesn’t care what is being done, so long as they get the larger pay check, that actually isn’t a bad thing so long as that overtime is actually creating more production and increasing profit. So either way, use this situation as a way to motivate everyone to make your business leaner and stronger for the times to come.

Leave a Comment

Your email address will not be published. Required fields are marked *