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Prepare Your Business for the New Overtime Rules


If you haven’t heard the buzz over the past few weeks, there has been a significant change in federal overtime rules for employees. For business owners it is important that you be aware of these changes. If you have employees you need to prepare to be in compliance and possibly fork out more cash when the law goes in to effect on December 1, 2016.

 The Facts

Under the current system, salaried employees earning in excess of $23,660 ($455/week) are excluded from time-and-a-half pay for hours worked over 40 in a week. Under the new rules the salary threshold more than doubles to $47,476 ($913/week). This rule does not apply to employees employed as bona fide executive, administrative, professional and outside sales employees.


Business owners will need to prepare themselves to face these changes as they could have significant effect on cash-flow not only in the increased wages but in administrative costs of keeping track of time.

The first step an employer should take is identifying the workers who will be affected. Employers who are not currently keeping track of exempt employees’ hours should start doing so they can predict how much overtime they will owe under the new laws. This will give baseline with which to work with in planning on whether your business can handle the increased expense.


Once you have figured out if your business will be affected and if so whether it can withstand the increase expense, you will be faced with some decisions to make. Unfortunately if your business will not be able to tolerate the expense burden you will need to make some changes and cut some costs. Looking at your financials and budgets will be a first step. Many businesses may have to cut in other areas to balance the increase in wages. Businesses who cannot find places to cut will be faced with tough decisions on changing your pay structure. Here are some steps that can be taken to lessen the burden of the new rules:

You also may need to invest in a better time-keeping system so that should be kept in mind as well.


Remember when all is said and done, being proactive rather than reactive is going to benefit your business. Take your time to understand the rules and if they will apply to you and take the necessary steps to keep your business in the best financial shape it can be. If you have any questions about the law or need an expert to evaluate the potential financial impact give your CPA a call.




Barnard Vogler & Co.
100 W. Liberty St., Suite 1100
Reno, NV 89501

T: (775) 786-6141
F: (775) 323-6211


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