By: Michael W. Myhre
Fact: small businesses are more adversely impacted economically and bear a larger burden from regulations than large businesses. Beginning December 1, Florida’s small businesses could face another challenge to their bottom line when the newly updated Fair Labor Standards Act (FLSA) takes effect.
In May, the U.S. Department of Labor announced the final ruling on the FLSA, which extends overtime benefits to 4.2 million workers. Under the new rule, approximately 331,000 Florida workers will be affected—the third largest number behind Texas and California. Although the plan was outlined more than a year ago, a recent Manta poll revealed that 52 percent of small business owners in the U.S. were unaware of the changes.
The new labor rule doubles the minimum annual salary for workers eligible for overtime pay to $47,476, or $913 per week. This level will be adjusted every three years beginning January 1, 2020. Currently, salaried workers who earn more than $23,660 and meet other criteria, including performing executive, professional, and administrative job duties, are exempt from overtime pay.
The impact of these changes, particularly for small businesses, is a topic of wide speculation. The FLSA does not provide exemptions for small businesses. Generally, businesses with annual sales of $500,000 or more that employ salaried, full-time workers who are paid less than $913 a week will be required to comply. Some options to comply to the new rules include keeping salaries the same and limiting overtime hours, raising salaries to the new minimum to avoid paying overtime, and changing the pay structure for salaried employees to hourly.
With the changes months away, Florida’s principle job creators – small businesses – should take the time now to get educated and take action. By being proactive, businesses can determine the appropriate plan that best suits and protects their company, employees and profits.
Michael W. Myhre is the CEO and Network State Director for the Florida SBDC.