What Small Businesses Need to Know About the New Federal Overtime Rule

Date: September 30, 2019

More management-level employees at your small business could soon be eligible for overtime, and NFIB wants you to be prepared. The U.S. Department of Labor recently issued a new overtime rule set to take effect Jan. 1, 2020.

The new overtime rule increases to $35,568 the salary threshold necessary to exempt executive, administrative, or professional employees from the minimum wage and overtime pay requirements. Currently, employees classified as managers who earn less than $23,660 annually must be paid time-and-a-half for the number of hours worked beyond 40 in a week. According to the Labor Department the new rule affects an estimated 1.2 million workers.

NFIB recognizes the nearly $12,000 increase in the threshold which will increase compensation costs for some small business owners, including those who can’t afford to raise prices, placing them in a bind. But it could have been much worse.

An NFIB lawsuit in 2016 helped block the Obama administration from raising the threshold to $47,476 — a $23,816 increase that would have affected even more small business owners.

Though the increase that takes effect on Jan. 1 is less than the Obama administration rule, businesses must still take steps to prepare to ensure compliance with the new rule.

To assist in this effort, we are gathering resources to keep affected members fully informed and prepared. Here’s how you can find out more:

  • The Department of Labor has information, including the full text of the regulation, available here.
  • Save the date: We are setting up a special webinar on Dec. 4 to discuss strategies for coping with the new rule and everything else you might need to know. We will provide you with more information as we get closer to the webinar.
  • You can always contact Beth Milito, Senior Executive Counsel at NFIB’s Small Business Legal Center for more information. You can reach her by phone at 202-406-4443 or by email at [email protected].

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