President Obama recently proposed a change to the overtime rules that would raise the salary threshold from $23,660 per year to $50,500 per year. The threshold allows for employees who make less than $50,500 to receive overtime pay of time and half for every hour that they work over 40 hours.
Currently overtime is paid to workers who have a specific set of job duties. Employers will not be required to pay overtime to workers who are paid over the threshold or those who do not perform the required set of duties.
Paychex, a large payroll company believes that if the proposal passes, it could actually benefit accountants. Mary Mucci, president and CEO of Paychex believes that the changes will create more work for accountants. Mucci says that for at least the next few months, clients will rely on the expertise of accountants to determine which of their employees are exempt and which are non-exempt from the overtime changes.
The overtime changes come at a time when the country is seeing only minimal small business growth. The changes may benefit accounting firms, but small and mid-sized businesses will feel the pressure and costs associated with the changes. Accountants will need to be hired to determine what the overtime costs will do to a business’ overall budget. Companies will then need to take that data and decide the best way to offset the new costs by determining if more employees should be hired instead of paying overtime. Accountants will be vital in helping companies crunch the numbers to see if the amount of overtime paid can be saved by adding additional employees and how to classify current employees and the overtime they already receive.
Mucci believes that while no decision has yet been made, the proposal is most likely to be approved.