To manage your payroll and accounting books effectively, you need to have a good understanding of all the nuances of local and federal laws and how these regulations impact your employees’ pay rates. Businesses not only have to abide by all the federal regulations, but local state restrictions and laws as well.
The Department of Labor recently announced slight changes to their overtime rules, which businesses throughout Indiana need to understand. Local businesses want to update their practices to remain compliant with the new thresholds mandated by the federal government to avoid potential legal ramifications.
Let’s explore what Indiana businesses need to know about the new overtime rule Indiana.
Understanding the New Federal Overtime Rule
The DOL overtime rule 2024 has changed the salary thresholds determining overtime eligibility. Typically, those in the following positions are exempt from overtime eligibility unless they earn below a particular salary threshold:
- Executive
- Administrative
- Other professional employee positions
The new labor law has significantly increased the salary that professionals must earn to still be exempt from overtime mandates.
Prior to this change, employees who made less than $35,568 per year had to receive overtime when they worked beyond 40 hours per week. However, on July 1, 2024, those who make less than $43,888 will now receive overtime pay. On January 1, 2025, it will increase again and those who make below $58,656 will need to receive overtime pay. The minimum salary is expected to continue to increase.
Impact on Indiana Businesses
For businesses in Indiana, this increase will result in many additional professionals becoming eligible to receive this extra money. Indiana overtime laws also mandate that those who work more than 8 hours per day or more than 40 hours per week receive overtime. Companies, therefore, need to adapt their payroll practices to account for this change. Here are some key areas businesses may want to examine as they prepare.
- Companies should consider how many professionals in the company will become eligible for overtime under the new rules. They should also look at how many hours a week those employees typically work and what their job responsibilities entail.
- Examine the payroll budget. Businesses should consider how the projected increase in pay will impact their budget. They may need to restructure how they handle certain responsibilities to keep their budget in line.
- Create a system for tracking hours. Businesses need to have a concrete way of tracking and verifying the hours of employees eligible for overtime to pay them accurately. If they do not already track this information, they need to implement a system.
As businesses implement these changes, they may encounter some confusion as people adapt to new systems. However, with clear communication and training to help employees adjust to any changes, businesses can make the shift smoothly.
Steps to Ensure Compliance
Maintaining Indiana business compliance is critical. Mistakes in these areas can quickly lead to fines and fees, which burden businesses and can damage reputations. Therefore, we recommend businesses follow these three steps:
- Review employees’ responsibilities and salaries to know who will be eligible for overtime under the new regulations.
- Update your payroll systems to manage the new overtime calculations
- Create a system for filing accurate records of hours worked and wages paid.
Benefits of Compliance
As businesses consider the changes they will need to make to become compliant, it can feel a bit overwhelming, particularly as a number of professionals at your company have now become eligible for overtime payment. It can help to review all the benefits of maintaining compliance with the federal and local regulations.
The primary benefit companies will experience is avoiding legal penalties and fines. These fines can quickly accumulate and outpace any additional salary paid to employees. These fines can also damage businesses’ reputations and employees might start to feel that the organization does not care enough to treat them fairly.
Similarly, you want to ensure your employees receive fair and just compensation. These new laws were designed to protect employees and improve their compensation for the valuable work they do.
Finally, employees appreciate increases in their pay. Abiding by the new overtime laws will improve employee satisfaction and retention. Employees will be better compensated, which in turn will encourage them to stay with your organization.
Prepare for the Changes in Overtime Pay with ASAP Payroll
The latest shifts in overtime payment regulations have increased the number of people eligible for time-and-a-half work. The change will come in steps, with the first increase occurring in July 2024 and another increase in January 2025. Reviewing the changes and proactively taking steps to prepare can help businesses adapt to the new situation smoothly and without major errors.
When businesses change their processes smoothly and improve the payment of their employees, they enhance employee morale and create a better work environment without incurring fines and fees. Fortunately, working with a payroll partner like ASAP Payroll can make this process even easier. Since ASAP Payroll specializes in payroll, they can help companies like yours adjust their practices to account for the new overtime rule Indiana.
Contact ASAP Payroll for expert guidance and services to help your business navigate and comply with the new overtime regulations.
