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The Welsh Wire: Mark Smith of Rhoades McKee

The U.S. Department of Labor has issued final rules increasing the minimum annual salary level paid to over-time exempt administrative, executive and professional employees from $23,660 to $35,568, effective Jan. 1 2020.

Mark Smith, an attorney with Rhoades McKee in Grand Rapids, talked about how these changes could impact businesses when he spoke recently with Sheri Welsh for The Welsh Wire podcast, sponsored by the Family Business Alliance.

“You need to do the math, have good communications and have a plan,” he said. “And a good sort of safety net is to talk to your legal counsel and make sure you’re doing it right from a legal point of view. If you have experienced legal counsel, they’ll also be able to help you on the morale side of things in terms of here’s best practices, here’s how this sort of thing can best roll out.”

Options for employers include simply increasing salaries up to the new levels, change salaried workers to hourly and pay them overtime for hours worked over 40, or leave the formerly exempt employees on a salary that is non-exempt from overtime.

“There’s no one size fits all,” Smith says. “I think an organization confronting this needs to look at how many people are affected. And let’s just do the math and see how it rolls out. If I take that first option and just roll everyone up, consider the ripple effect upstream. What’s it going to do to the morale of my organization? And how good am I in terms of my long term classification of these people as falling within those exempt categories, the duties tests. You really need to analyze all of those factors before you can make a decision.”

Rhoades McKee has posted two articles on their website that discuss the ramifications of the new salary requirements: Rule Increasing Minimum Salary Level Returns and The New Salary Requirements: Understand the Options and Liability.

Learn more about the new rules when Mark Smith talks with Sheri Welsh on this week’s Welsh Wire podcast, sponsored by the Family Business Alliance.

Listen to Sheri’s entire interview with Mark Smith.

Subscribe to The Welsh Wire podcast on iTunes for additional informative, entertaining interviews with west Michigan business leaders.