Making rules is hard. Addressing the compensation and labor rules in our Country is long overdue. Fair and equitable compensation for our skilled workforce is also long overdue. However, the new wage threshold and overtime law is a financially significant change that will result in some possible pain points for companies, working hard to protect tight cash flow margins or working smart to fund growth opportunities. Because the new threshold more than doubled and with only 6 months to become compliant, companies need to immediately begin to assess and analyze the impact to them.
Begin by considering the following:
1. Review which employees will be impacted and perform a cost analysis to decide the course of action:
a. Will you reassign job responsibilities and/or hire additional personnel to reduce or restrict overtime?
b. Will you raise the salary to the $47,476/ year to maintain the exemption?
c. Will you pay current salaries with overtime after 40 hours/week?
2. Review current employee classifications and job responsibilities and internal policy documents that will need to be updated such as employee handbooks.
3. Review current policies and procedures for reporting and tracking time. Employees that previously did not keep timesheets may now be required to do so. This may require additional timekeeping software, additional administrative support, or training for employees.
4. Consider the impact to the organization as a whole. What does the company need to consider with regards to employee morale and culture.
5. Analyze the financial impact on current and future years and devise a financial plan which protects the cash position of the company and does not limit growth opportunities for the organization.
CFO Strategic Partners is helping our clients navigate these decisions to ensure compliance, assess and plan for the financial impact, and communicate these strategies to the employees. #askCFOSPhow