In an effort to help businesses prepare for the U.S. Department of Labor’s expected expansion of overtime protections in 2016, Paycom Software, Inc. (NYSE:PAYC), a leading provider of comprehensive, cloud-based human capital management software, has released a free, online calculator to help companies determine how much the proposed changes are likely to cost their organization.
The proposed rule change would make employees whose annual salaries are less than $50,440 eligible for overtime pay. This could cost employers over $5 billion per year, unless they otherwise find ways to control labor costs, according to a study by Oxford Economics commissioned by The National Retail Federation. Department of Labor officials have indicated that the rule likely will be issued in the second half of 2016 and, once enacted, could affect more than 5 million white-collar workers.
“This proposed change to the salary threshold is another example of the increasingly complex regulatory environment faced by employers today,” said Paycom’s founder and CEO, Chad Richison. “It is our goal to aid organizations in their efforts to properly prepare for these changes in order to mitigate their compliance liabilities.”
Based on the specific data entered by organizations regarding overtime hours worked by their employees, Paycom’s overtime calculator instantly estimates how much employers could face paying in overtime, per year. Additionally, Paycom’s tool provides employers with an inflection-point salary level, indicating where it may be more cost-effective to raise an employee’s annual pay past the proposed threshold of $50,440, instead of paying overtime.
Employers who violate provisions of the Fair Labor Standards Act may face financial penalties with varying levels of severity, based on a variety of factors, including whether the violations were willful or made in good faith, as those terms are used in the law. The Department of Labor’s Wage and Hour Division (WHD) can choose to conduct an investigation into a company’s timekeeping and payroll practices at any time. In the past, the agency typically has acted in response to employees who claimed they were not receiving overtime. However, the WHD has increased the number of investigations, independent of employee complaints.
Paycom’s full suite of human capital management products is driven from a single database, including robust time and labor management applications and reporting capabilities that help businesses evaluate their options regarding the multitude of decisions they face daily, including how to minimize the impact of the proposed overtime expansion on their organization.
To access Paycom’s overtime expansion calculator, visit paycom.com/calculator/overtime/.
The content of this press release is intended to keep interested parties informed of legal and industry developments for informational purposes only. It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice. For full details of the proposed rule change, please visit the Department of Labor’s website.