The proposal could mean higher costs and more headaches.
A proposed update to labor standards, announced by President Obama in late June, would more than double the threshold—$50,400 up from $23,660—below which salaried employees can receive overtime pay. Under this rule change, millions more workers would be eligible for overtime, and their employers would have to grapple with higher costs of both wages and compliance with the new rule.
For small businesses in particular, which don’t have large, dedicated human resources departments, the process of tracking and managing the hours worked for employees who were previously paid a set wage would be burdensome. It would be especially tricky in flexible work agreements, where employees work from home while balancing family life.
Dawn Starns, NFIB’s Louisiana state director, told the Greater Baton Rouge Business Report that small business owners have also expressed concern about potential changes to the “duties test.” This test determines if a worker is exempt from overtime rules because he or she primarily performs executive, administrative or professional duties on the job. Critics of the current duties test say employers can simply designate workers as supervisors, even if their duties are not different than those they oversee, to avoid having to pay them overtime. This has led employers to worry that additional paperwork, bookkeeping and compliance measures may be enacted in connection with this test.
Starns also pointed out that some businesses will be unable to pay their workers more, leading to potential hour reductions or job eliminations.
A comment period on this proposal was open until Sept. 4, and if the rule change is enacted, it will likely go into effect sometime in 2016.