Paychex Small Business Snapshot: 1 in 5 Business Owners Are Unaware of the DOL’s Proposed Overtime Rule | Business Wire

ROCHESTER, N.Y.–(BUSINESS WIRE)–The U.S. Department of Labor (DOL) is expected to finalize its proposed

overtime rule in the coming months, and despite the fact that it is

expected to have a significant impact on businesses, 1 in 5 business

owners claim they are unaware of the rule altogether. Paychex, Inc., a

leading provider of integrated human capital management solutions for

payroll, HR, retirement, and insurance services, is offering five

recommendations business owners should consider implementing now in

order to prepare for the final rule.

The rule, as

proposed, would raise the weekly salary threshold for executive,

administrative, and professional white-collar workers to qualify for

exempt status under the Fair Labor Standards Act from $455 ($23,660

annually) to more than double the amount: $970 ($50,400 annually).

The latest Paychex

Small Business Snapshot showed 20% of business owners are currently

not aware of the DOL’s proposed overtime rule and 55% said that it will

have little or no impact on their business, perhaps underscoring a lack

of knowledge on the potential implications of the rule, which are

expected to be far reaching.

Of those owners who are aware of the rule and believe they’ll be at

least somewhat impacted by its implementation, 53% said it will affect

staffing changes such as adjusting employee schedules. In addition, 19%

said they will incur increased overtime expenses, while 17% reported the

rule would lead to downsizing.

“Staying up-to-date on the ever-changing regulatory environment can be a

challenge for business owners, but unfortunately failing to comply with

such rules can lead to costly financial penalties,” says Martin

Mucci, Paychex president and CEO. “For that reason, we recommend

working with a trusted advisor to navigate new rules such as this.”

The proposed rule, which received more than 200,000 comments during an

active public comment period, will expand the number of employees who

are eligible to receive overtime pay, or time and one-half their regular

rate of pay for hours worked over 40 hours in a workweek.

In preparation for potential impacts the overtime rule may have, here

are five workflow recommendations for business owners to consider:

1. Review and identify employees

Reviewing and confirming how employees are currently classified is the

first step. Certain employees may not be impacted by the changes, but

those employees currently classified as exempt from the overtime

protections of the Fair Labor Standards Act pursuant to the executive,

professional, and administrative white-collar exemptions need to meet

the duties test for their exemption as well as the salary threshold.

Work with your payroll and HR team to review your payroll and identify

exempt employees with current salaries below or very close to the new

proposed salary thresholds.

2. Determine which employees will transition to non-exempt status

Once you have confirmed the exempt status of employees most likely

impacted by the proposed rule, you will need to decide how to proceed.

Employers have two options: (1) increase the salary level to maintain

exempt status, or (2) transition the employee to non-exempt status.

Employers who choose to transition employees to a non-exempt status will

need to determine the basis for pay (hourly or salaried) and ensure they

meet the minimum wage requirement for the number of hours the employee

is expected to work. They should also consider whether overtime will be

necessary and permitted. Consistency is crucial to mitigating exposure

to discrimination lawsuits.

3. Update timekeeping policies

Updating recordkeeping requirements and procedures can be critical to

ensure full compliance. If you have employees who will transition from

exempt to non-exempt status, you will need to begin tracking all time

worked for these employees, including overtime hours. Review your

time-tracking methods and evaluate if there’s a need for more

automation. Should the new rule significantly impact the number of

employees who need to track their hours worked, an alternative method of

tracking, such as a time and attendance software, may better suit your


It is also important to establish clear, written employee policies for

recording time worked and overtime. These should include the procedure

for recording time, what is considered time worked, how overtime is

approved and by whom, and the potential disciplinary action for failing

to follow the company’s policy. This information should be distributed

to all employees or published in an employee handbook.

4. Develop training procedures

Once recordkeeping and overtime policies have been updated, educate your

staff on the company timekeeping and overtime approval procedures. This

should be done for supervisors, managers, and newly impacted employees,

and consider a refresher for current non-exempt employees to ensure the

policy is consistently applied. Deliver this training as soon as

possible, with supervisors performing regular audits of time records.

5. Create and execute a communication plan

The new rule on overtime pay is expected to impact a significant number

of businesses this year. To combat the questions or concerns that arise,

develop a communication plan for announcing the changes internally. The

plan should introduce the procedures for reporting hours worked, as well

as when and where you will communicate the change to supervisors,

managers, and employees.

It may be best to speak first with managers and supervisors, and then to

impacted employees individually. Or, discussing the changes in job

classifications or time tracking procedures with the entire staff might

be more appropriate. Choose the approach that best fits your business,

as long as the overall message is consistent to reduce confusion and

potential compliance issues in the future.

Paychex has an advanced suite of time and attendance products, including

web and mobile tools, to assist businesses and employees with the

scheduling, tracking, and reporting of time. The solutions from Paychex

can assist companies with efforts to enforce their own policies and

comply with applicable rules and regulations.

For more information on the DOL’s new overtime rule, visit the Regulatory

Updates section of

Note: The foregoing is provided for informational purposes only, and

is not intended to be tax or legal advice. Consult your licensed

attorney, accountant, or other tax professional to discuss your

particular facts, circumstances, and how these opportunities might apply

to your business.

About the Paychex Small Business Snapshot

Data included in the Paychex

Small Business Snapshot was taken from the results of the Paychex

Small Business Survey, administered by Bredin. The survey was conducted

online between February 12, 2016 and February 26, 2016 and polled 318

principals of U.S. companies with less than 500 employees.

About Paychex

Paychex, Inc. (NASDAQ: PAYX) is a leading provider of integrated human

capital management solutions for payroll, HR, retirement, and insurance

services. By combining its innovative software-as-a-service technology

and mobility platform with dedicated, personal service, Paychex empowers

small- and medium-sized business owners to focus on the growth and

management of their business. Backed by more than 40 years of industry

expertise, Paychex serves approximately 590,000 payroll clients across

100 locations and pays one out of every 15 American private sector

employees. Learn more about Paychex by visiting,

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