On Tuesday, May 17th, 2016, the Labor Department announced a significant economic reform under the Obama administration. Effective December 1st, this reform will essentially double the official overtime salary threshold, raising it from $23,660 to $47,476. The reform will also allow the Labor Department to raise this threshold every three years to keep up with inflation.
Workers who earn salaries below the overtime threshold are entitled to time-and-a-half pay if they work more than full time or 40 hours per week. By raising the threshold, millions of workers will be granted overtime rights to which they previously had no access.
How This Will Affect Workers
The overtime threshold is designed to protect workers from being overworked without sufficient compensation. Workers in all fields will see the changes, especially women and minority groups who make up a disproportionate percentage of lower income brackets. Some workers will start getting paid more for their overtime work while others will see their hours reduced.
How This Will Affect Employers
Raising the overtime threshold will discourage many employers from causing their employees to work long hours due to the expense. Companies are unable or unwilling to provide time-and-a-half pay for their workers may need to turn to alternative means of employment to maintain the same profitability. Independent contractors (ICs) provide an easy solution because current legislation does not guarantee them the same rights and protections as employees.
How We Can Help Your Business
If this new government reform could be a game changer for your company and you are considering adopting an IC business model to make up the difference, make sure that you understand all the details about what you are getting into. Careful planning and having an in-depth understanding of how to properly and legally manage an IC business model will allow you to hire ICs without risking costly lawsuits and regulatory audits.
Consultech Preferred IC Consultants offer pro-active and re-active services to help you create a compliant IC business model and represent you as necessary before legal courts and agencies. Our experience in helping businesses navigate the complexities of an IC business model has saved our clients millions of dollars in expenses, legal fees, and settlement costs.
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