New federal rules about overtime pay go in effect this December. And that could mean big changes for many island businesses. Pacific Business News Editor in Chief A. Kam Napier has more.
On December 1st, the U.S. Department of Labor will raise the threshold for overtime pay from $23,660 to $47,476. Most people associate overtime pay with hourly workers, not salaried employees, who earn a flat annual amount regardless of how many hours worked. But this rule is aimed right at those salaried employees.
Nationwide, the federal government estimates, some 4 million salaried workers could become eligible for overtime pay.
According to the Hawai‘i Employers Council, the time for business to plan—and share that plan with coworkers—is now. Businesses have six months after December 1st to get into compliance, but it could take some time for businesses to adapt.
Employers have three main options. They could raise salaries beyond the $47,476 threshold and not have to track, or pay, for overtime. They could convert affected salaried employees to hourly employees. Or they could restructure their operations and shift duties around so that no overtime is worked.
Ryan Sanada, Director of Legal and Government Affairs at the Hawai‘i Employment Council, says nonprofit organizations will find the new rules especially challenging with their low salary ranges and fixed budgets.
The new rule comes in a time when small businesses are feeling overwhelmed by the complexity of regulations and the cost of compliance. Two-thirds of small businesses surveyed by the national retail foundation say that the cost of compliance has forced them to cut employee benefits.
