To discuss the big changes to overtime rules and minimum wage I recently interviewed Small Business and Payroll Expert Rob Basso to share his take on how Americans will be paid in 2016. Rob is the owner of Advantage Payroll and author of the Everyday Entrepreneur.
The changes announced by the Department of Labor will impact how 4 million currently exempt employees will now be eligible to receive overtime pay.
Is it a great thing? Well maybe or maybe not. What will it mean to you? Will you be able to make more money if you work longer hours? You may end up on the other end of the equation. How? You might be burdened with doing more work to alleviate the overtime burden to your employer.
Will it encourage employers to shift workloads to an exempt co-worker to avoid paying you additional overtime?
For many small businesses, colleges, and nonprofit organizations, the new overtime requirements present a difficult challenge. Rather than provide employees with increased pay, many businesses may opt instead to reclassify employees as nonexempt and restrict their work hours to no more than 40 per week.
2016 will also see the new minimum wage law. What impact will it have on small businesses hiring and expanding?
In talking to his clients Rob Basso said that, “Many small business owners would prefer to have a higher wage for their employees. The problem is how do business owners pay for it? The two most likely ways business owners will pay for the increased wage is through a cut to profits or an increase in costs to their customers.” Rob went on to say that he feels part of the impact can be less employees being hired than if the wage remained lower.
We would all like workers to have a better working wage – but at what cost? If less people are hired and businesses are less competitive – who wins?