Understanding Payroll Overtime: Changes and Updates
As a small business owner, staying compliant with labor laws is crucial. The Fair Labor Standards Act (FLSA) is undergoing significant changes that will affect how you classify and compensate your employees. At Yield Bookkeeping, we want to keep you informed about these updates to help you maintain accurate financial records and avoid potential penalties.
Key Changes to FLSA Overtime Rules
The Department of Labor has announced new salary thresholds for exempt employees, effective July 1, 2024. Here’s what you need to know:
- White Collar Exemption: The minimum annual salary to qualify for this exemption is increasing from $35,568 to $43,888 per year (or $844 per week).
- Highly Compensated Employees: The total annual compensation requirement remains at $107,432 per year, including at least $684 per week paid on a salary or fee basis.
These changes mean that more employees may become eligible for overtime pay, potentially impacting your payroll and budgeting.
What This Means for Your Business
- Review employee classifications: Assess your current exempt employees’ salaries and duties to determine if reclassification is necessary.
- Update payroll systems: Ensure your timekeeping and payroll processes can accommodate potential changes in employee status.
- Budget for potential increases: Consider the financial impact of raising salaries or paying more overtime.
- Communicate with your team: If changes are needed, clearly explain the reasons and implications to affected employees.
- Stay informed: Another salary threshold increase is scheduled for January 1, 2025, so it’s important to stay updated on FLSA regulations.
How Yield Bookkeeping Can Help
At Yield Bookkeeping, we specialize in providing accurate and up-to-date bookkeeping services for small businesses. While we don’t offer legal advice, we can help you:
- Review and update your payroll records
- Assist with financial forecasting to account for potential overtime increases
- Ensure your books reflect any changes in employee classifications
- Provide clear financial reports for your CPA
Don’t let these FLSA changes catch you off guard. Remember, complying with FLSA regulations is not just about avoiding penalties—it’s about treating your employees fairly and maintaining a positive workplace culture.
Read more about the changes at the National Law Forum Blog
