Small business owners must act quickly to determine a plan for compliance.
Overtime Rule Will Impact 70,000 Louisiana Jobs
Ever since the Department of Labor handed down an update to federal overtime rules, small business owners have been scrambling to understand how this new mandate will impact them and their employees.
Under the rule, the threshold at which employees in white-collar jobs are exempt from being paid overtime would nearly double: from $23,660 to $47,476. The Fair Labor Standards Act dictates that if an employee is paid at a minimum wage level; if an employee is paid on a salaried basis; and if the employee’s job is professional, administrative, and executive in nature, they are exempt from earning overtime pay. So, now, salaried, white-collar workers earning less than $47,476 will be entitled to overtime pay. NFIB estimates the new rule will impact 44 percent of small businesses.
The Greater Baton Rouge Business Report recently reported on how Louisiana employers are doing following the rule’s announcement. According to Renee Amar, small business director at the Louisiana Association of Business and Industry, the rule will impact about 70,000 jobs, or 3.5 percent of the state’s workforce. Businesses with employees who fall below the overtime exemption threshold will either have to pay workers any overtime they earn, reclassify workers as hourly instead of salary, boost salaries above the threshold, or institute a weekly cap on hours worked.
In addition to potentially higher costs, the rule has also created confusion for business owners. Kean Miller, a business law firm with five locations across Louisiana, told the Business Report he has received many calls from clients seeking advice about compliance with this rule.
NFIB/LA State Director Dawn Starns told the Business Report that the changed rule will negatively impact both employers and employees.
“Employers will have to work very quickly in the next few months to reclassify employees, rebudget, and reinvest their whole business plan to figure out how this fits in,” she said. “On Dec. 1, labor costs will skyrocket because of this rule. Not only that, but the burden of the paperwork, changing the business model, and shuffling around employees.”
Meanwhile, employees will face a potential loss of managerial status and flexibility, which could lower morale.
For more information about the rule, visit www.NFIB.com/Overtime.
