On December 1, 2016, the salary threshold forovertime pay is set to nearly double from $23,660 to $47,476,by way of the Fair Labor Standards Act. For business owners, thismeans salaried employees earning less than $47,476 will now need tobe paid overtime for any time worked over 40 hours in a given week.This is no small change, and small business owners in particularare poised to be hit hard by these new regulations.

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The regulations bring with them positive outcomes for thesegment of workers who might have been working 70 hour workweeks ata minimum wage salary, with no account ofovertime pay. However, for small business owners facing such amarked change in how they pay their employees, it has implicationsfor everything from company culture to the company’s bottom line —and in the end, how many people a company can employ while stillmaking ends meet.

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For many business owners, the change already seems unmanageable,and has caused a certain level of grief — from wondering how tomaintain the standards of pay and benefits that they’ve establishedover the years to simply negotiating the details of a complicatednew regulation.

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At my own company, we’re also coping with the grief, and found ahelpful way to make our way through the process and illustrate theperspective for other small business owners as well. We call it(with apologies to Elisabeth Kübler-Ross): The Five Stagesof (Overtime) Grief.

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Stage 1: Denial – Small business ownersthink, “This couldn’t possibly apply to me. How will I comply withthese regulations and still remain profitable?"

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Stage 2: Anger – "I’m doing my absolute bestfor my employees right now and everyone is happy. Why is thishappening?"

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Stage 3: Bargaining – “I’m sure we can workthis out somehow. Maybe I can give pay hikes to put workers abovethe threshold, rather than reclassifying the workers tohourly.”

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Stage 4: Depression – “I’ve analyzed costs anddon’t think we can manage. But, if we don’t comply, the penaltiesare steep. Not only that, how do I maintain a positive companyculture when compensation and benefits are bound to beaffected?”

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Stage 5: Acceptance – “We can do this, butwe’re going to have to do it together and we’re probably going toneed some help. December 1st will be here before we knowit.”

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Once you’ve made it to stage five, you’re probably ready forsome practical advice. Well, to come to terms with the new rules and begin proactively makingdecisions, businesses need to be systematic about theirapproach.

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Here’s how you can navigate the journey and make the bestdecisions for your organization come December1st:

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Look at your actual numbers

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Take an honest look at the salaries of your employees andevaluate the actual amount of hours each employee is workingweek-to-week. By getting a read on the current state of work andovertime hours, proper decisions can be made on how to adopt thenew rules. If you don’t already havea reliable time and attendancesystem in place to track employee hours, make sure you get one.Whether you use software or have your employees punch in and out, atracking system will help you to get specific with yournumbers.

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Make compensation adjustments now

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Don’t hesitate on tough decisions. Once you’ve analyzed workers’pay and time statistics, make a call as soon as possible on whichcompliance method to take for each employee. Business owners canchoose to increase salaries to meet the minimum threshold, payovertime to those now eligible to receive the pay rate, eliminateovertime altogether in the company, or make a reduction in basesalary to afford the overtime changes.

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Outline enforcement rules

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A good deal of the resistance to the new regulations stems fromthe enforcement concerns associated with overtime standards. Inorder to stay within the boundaries, set up specific protocols foremployees working overtime, such as whether it is allowed or not,who is limited to core hours, etc. While these changes may betough, the legal issues that could arise from lack of adoptioncould be more damaging to a small business.

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Communicate with your staff

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Wherever there’s confusion, there’s usually a lack of communication. Once you’ve analyzedyour numbers and figured out how you’re going to comply as acompany, hold a meeting with your employees to communicate a) whatthe new regulations mean for your business, b) how you’re going tocomply with the regulations as an organization, and c) how the newpolicies will affect employees on an individual basis. Provideclarity wherever you can, encourage questions, and reassure youremployees that you’re committed to them as individuals and toupholding the company culture you’ve worked to foster prior to thenew regulations.

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It’s absolutely possible to examine all of the aspects of thenew regulations and come to accept the outcome, while stillmaintaining company culture and profit margin. By honestlyexamining the status of your workers and how the new rules willtake effect, owners can make smart, calculated decisions to helpmake the overall transition much smoother.

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