Beginning Dec. 1, the federal minimum salary threshold eligible to receive overtime pay will double. Talk to me about the impending change.
A lot of the interest has been in actual time keeping. A lot of these employees have never kept track of their time. Employers don’t know if they are working overtime or not or if they are, how much.
How will the new rules affect the payroll industry?
From our standpoint, what changes is the way our customers operate. Our biggest change is there are more people wanting to use the time-clock system. We are doing a lot of demos and implementations, ordering a lot of clocks and doing a lot of training on how to use they system and the rules.
What do those time systems look like?
You can use your smartphone with an app to clock in, you can clock in at your computer or you can use a device that clocks in. No matter which way you do it, the punches all end up at the same website – it’s all cloud based. We have people that use actual time clocks. At our office, we have a facial recognition time clock at the door. The employee walks in, looks at the clock and the clock says, “thank you,” and clocks them in. They don’t have to push buttons. There isn’t that time it takes to walk from the door to your computer, turn on your computer and clock in. You are getting a more accurate analysis.
What’s the net effect from these regulatory changes?
They are creating a huge burden of reporting from employers. At some point there is going to be a detrimental impact. The next proposed change is on the Equal Employment Opportunity report, something employers with over 100 employees have to submit annually. Right now, it just has demographic information, but they have proposed to add wage information.
Are employers nervous?
Yeah, they are, especially from the C-level, where they are trying to manage a budget. They had planned one way, and now they are being told to do it another way. It’s the same nervousness they would feel with a proposed minimum wage hike. It’s affecting their operating budget, which affects the bottom line. When you’re running a business, unrequested change is not something you eagerly embrace.
Have you seen many of your clients bump people up in pay?
Not yet, but we won’t know that until Dec. 1. Most people are in analysis mode. I haven’t seen any mass raises, but I know people are looking at it. For some people, the majority of their employees are in that range. Some people have 20 employees and 15 are salaried.
A lot of companies still are doing their payroll in-house. Can they keep up?
It will require more investment on their part and more work. For the smaller people who have been trying to get by with the basic tools, that is definitely driving more and more people to outsource. It used to be 60 percent; my guess now would be closer to 70 or 75 percent.
Is the new rule a good thing?
From my point of view, there is some good in it. They may have gone too far. The minimum amount being $23,660 was definitely too low. Is $47,000 too high, that’s up for discussion. I would have done it more in stages, but it was probably time to adjust.
Brian Weimer is CEO of A Plus Payroll Ltd. He can be reached at brian@apluspayroll.com
