For the first time since 1938, the federal government has redefined who is eligible for overtime pay and who is not. But when the new rules go into effect later this month, experts estimate that at least one in five businesses across the nation will be unprepared.
To help combat the lack of awareness about the new Fair Labor Standards Act, which classifies professions eligible for time-and-a-half pay, the Greater Reston Chamber of Commerce is sponsoring a seminar on Aug. 19, days before the deadline for businesses to implement the new rules.
"This law is huge," said Carol Losee, a human resources consultant who will run the upcoming seminar. "It really does hit a great deal of employers."
At least 20 percent of businesses across the country will not meet the law's Aug. 23 deadline, according to a national survey conducted last month by Hewitt Associates.
In Reston, officials with the chamber of commerce said they expect many local businesses are unaware of the new rules.
"There are so many regulations out there, it's difficult for small business owners to be aware of how this will apply to them," said Donna Miller, chairman of the chamber of commerce.
Miller said the chamber is scrambling to notify its members about the looming deadline and urging them to attend the seminar, though some small businesses may be exempt from the new rules if their annual gross business volume is less than $500,000 and they do not conduct business across state lines.
"No one likes fines or penalties," Miller said. "The business community needs to become aware of this."
ONE OF THE KEY provisions of the new law triples the minimum amount which makes workers eligible for overtime. Previously, workers earning only $8,060 annually were guaranteed time-and-a-half for working more than 40 hours in a week. Now, workers earning less than $23,660 are automatically eligible and workers earning more than $100,000 are not.
For workers in between the two new thresholds, things get more confusing. To determine if a worker is eligible for overtime, a three-part test can be applied:
* Workers are exempt from overtime pay if they are paid a set salary, not hourly. The new law does not change this existing rule.
* If a worker earns more than $455 a week or $23,660 a year, the worker is exempt from overtime pay.
* If a worker performs "administrative," "professional" or "executive" job duties, the worker is exempt from overtime rules.
The "duties" test, which attempts to classify which jobs are eligible and which are not, is proving particularly controversial, Losee said.
Some employers are redefining workers' job titles or giving them slight raises over the minimum threshold in an attempt to avoid the new regulations, she said.
Other businesses are simply ignoring the new law, Losee said, believing a Department of Labor investigation is unlikely.
But, she pointed out, if employers are caught willfully not complying with the new rules, they could be fined up to $10,000 and imprisoned for up to six years.
"If employers would just get on the program, it'd be better for everyone," she said.
RESTON BUSINESSES, particularly employers of service industry workers, are being urged to audit their practices to ensure they are in compliance.
Major lawsuits, which led to the law's overhaul, cost companies like Bank of America, Coca-Cola and UPS as much as $22 million because employees were not paid overtime.
In an attempt to avoid similar class action suits in Northern Virginia and to generally help ensure compliance, the Virginia Department of Business Assistance asked the GRCC to host the upcoming seminar.
"Like many changes in laws like this, people are scrambling to get their data together and put it in place," said Tracey White, president and CEO of the chamber of commerce. "