02 22 2016

Small Business Overtime Regulations

02 22 2016

Preparing Small Businesses For The New Overtime Regulations

As a small business owner, you are no doubt constantly facing situations with unexpected costs that may require obtaining a working capital loan or other sources of alternative financing. Without the proper foresight, these unforeseen expenses, such as an inventory shortage or repairs and maintenance, can add up and place a heavy burden on operating capabilities. One such new rule that can potentially blindside owners if they’re not paying attention is the new federal overtime regulations. While the regulation is still in its proposal stage, many experts agree that the U.S. Department of Labor will issue its final rule sometime in 2016, which would effectively overhaul the overtime exemption rules and salary threshold provisions of the Fair Labor Standards Act.

The new overtime regulations

Back in June 2015, the department released its proposed overtime regulations that would more than double the minimum salary for executive, administrative and professional exemptions from $23,660 (or $455 per week) to $50,440. This means anyone you pay below the $50,440 threshold will be eligible for overtime for any hours worked above and beyond 40 per week.

Further, the new regulations would also reclassify the total annual compensation requirement that would automatically exempt highly compensated employees from $100,000 per year to $122,148 annually.

Finally, the proposed rules would also create a mechanism for automatically increasing the threshold for salary and compensation levels to ensure they continue increasing at adequate rates. However, the department has not stated whether this will be based on inflation or other metrics.

Next steps for owners

While keeping this important rule change on your radar is important, it’s also equally crucial that you take the necessary steps to prepare your business and protect your budget from these changes.

The Society for Human Resource Management, recommended some crucial next steps that all small business owners should undergo during this transition period. This is especially key for companies that do not utilize a human resource division or that do not have a dedicated human resource manager.

First, it’s key that you know exactly how many hours a week your employees work. This might entail creating threshold alarms or scheduling tools to manage overtime so you know when an individual is on the clock for more than 40 hours a week. There are great software programs that you can purchase to assist with this monitoring process.

Next, it might be wise to consider raising employees’ base salary if they were previously exempt from the overtime rules but who would now fall under the new regulation. This would require you to calculate the increased salary and compare it to the estimated overtime costs to determine if this is a viable, cost-effective strategy. For some companies it might be a good route, while for other ones it could end up being more expensive.

As noted in MarketWatch, experts anticipate roughly 211,000 small businesses employing 1.8 million workers to face new compliance regulations for these overtime pay rules. In particular, many low-wage salaried workers in western and southeastern states will most likely be affected.

With the potential for an increase in labor costs, small business owners must be prepared to take on additional operating budget items. This might include increasing managers’ salaries, lowering rent, hiring and training new part-time employees or some other combination of cost-cutting measures to avoid these new overtime expenses. For some businesses, it can take time to revamp the budget, and owners might find themselves short of cash. In a situation like this, obtaining a small business loan from an alternative lender can be key for bridging this fiscal gap.

Find Out How Much Funding You Qualify For

Fields marked with an * are required
By clicking this button I agree to all terms and conditions.

Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

 

Text Messaging:

By providing my wireless phone number to National Funding, Inc., I agree and acknowledge that National Funding, Inc. may send text and multimedia messages to my wireless phone number for any purpose. I agree that these text or multimedia messages may be regarding the products and/or services that I have previously purchased and products and/or services that National Funding, Inc. may market to me. I acknowledge that this consent may be removed at my request but that until such consent is revoked, I may receive text or multimedia messages from National Funding, Inc to my wireless phone number.

  
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121. Funding amount and credit approval is subject to a full credit profile review.