Navigating Overtime Rules for Small Businesses

Navigating Overtime Rules for Small Businesses

In April 2024, the U.S. Department of Labor (DOL) released updated overtime rules following the implementation of the current rule that was issued on January 1, 2020. With potential changes on the horizon, it’s crucial for small businesses to understand key aspects of overtime pay regulations.

Here are a few changes that local business owners in Connecticut need to know:

Overtime Pay
Overtime pay is 1.5 times the regular pay rate for hours worked beyond 40 in a workweek. Exempt employees are not eligible for overtime, and various factors, including employee classification and state regulations, can influence overtime rates. Any business covered under the Fair Labor Standards Act (FLSA) must pay non-exempt employees overtime. Even smaller businesses not covered by FLSA may have state-specific obligations.

Employee Classification
Employees are classified as exempt or non-exempt, determining their eligibility for overtime. Exempt employees work in professional, executive, or administrative roles, meeting specific criteria outlined by the DOL.

Overtime Refusal and Employer Obligations
Employers cannot refuse to pay overtime to eligible employees. Implementing policies against unauthorized overtime is allowed, but failure to pay overtime can lead to substantial fines and legal consequences.

Employee Overtime Refusal
Employees can refuse overtime, but consequences may vary based on state laws and employment terms. At-will employment states allow employers to terminate employees for refusing overtime, with some exceptions.

Salary Thresholds
Potential changes to salary thresholds may require employers to transition employees or increase salaries, impacting expenses, morale, and benefits.

Staying up-to-date on overtime rules is essential for businesses. As the DOL releases new rules, employers should be proactive in understanding and adapting to potential changes to ensure compliance and smooth operations. You may also want to consider tools like payroll service providers to streamline processes.

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