Small Businesses Concerned About New Pay Requirements for Managers

In the past, many small businesses have been able to avoid granting overtime pay to some workers, which in turn may have helped them to save money overall. However, a new plan from President Barack Obama would dramatically alter the ways in which they have to pay their managers.

Salaried employees earning at least $455 per week (which translated to a little less than $12 per hour) are currently exempted by federal law from receiving overtime pay when they have managerial duties, according to a report from the Wall Street Journal. However, Obama recently put forward a proposal which would more or less double that number, as the White House believes that the $455 per week – some $23,660 annually – is below the federal poverty line for a family of four. That has some small business owners concerned about the ways in which their bottom lines will be affected.

Many already operate on slim margins, and to potentially have them further thinned out by additional distributions to workers who would not have been in line for such benefits in the past, the report said. Moreover, some critics of the move says it removes the incentive for employees to try to earn promotions through hard work and dedication.

“You work hard, develop the maturity for a salaried position, and then move up,” Emo Pentermann, owner of Bell ATM Service Inc., told the newspaper. “It takes away that whole level of maturity and freedom of choosing to get the job done in the time allotted. So for all practical purposes, they just might as well be on a time card.”

Opposition already arising
The National Federation of Independent Business has already said that it will fight any changes to the ways in which workers can earn overtime pay, and it may be joined by a number of other small business lobbyists, the report said. However, economists are less certain that any such change would actually have any kind of major impact on companies’ bottom lines on a broad basis, simply because the number of workers (5 million) who might qualify for the expanded rules could be relatively small in the grand scheme of things.

Owners concerned about this added expense might want to consider other ways to get their companies’ finances in order, such as cutting costs for small business insurance. Shopping around for more affordable general liability insurance coverage, for instance, might end up saving them thousands of dollars annually.