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Labor Laws Set to Change

The Obama Administration has done some rule-making with the Department of Labor that could dramatically change pay scales for many workers. The changes are expected to go into effect by the end of the year, although there is not a specific date yet. What’s at stake is how employees are classified for compensation purposes. The rule-making would raise the salary threshold dramatically, making millions more employees eligible for overtime compensation. Currently, employees who earn up to $23,660 annually must be paid hourly. Some of those who earn more than $23,660 could be classified as exempt, and not eligible for overtime pay. With the new rule, that threshold would be increased to $50,440. Employees earning less than that amount would now be non-exempt and would be paid hourly. Employers would face difficult decisions on which employees may need to cut their hours to stay within budget. Many exempt employees today work more than forty hours per week, but the budget each year is set and based on the known salaries, not on how much an employee could make if he/she was paid hourly for the hours worked beyond the traditional forty each week. The U. S. Chamber of Commerce is leading the charge in Washington, DC to oppose this new rule, but with no luck so far. Think about your own company and what you pay your employees. How would you fare if this rule goes into effect? Beyond the pay issues already described, will there be impacts on employee benefits and flexibility in work hours? The Prescott Chamber will continue to monitor this plan and keep our members informed. We are discussing the possibility of a seminar or workshop for our members in conjunction with the Prescott Valley Chamber of Commerce. Watch for further details soon.