New OT rules force small businesses to make hard choices

NEW YORK (AP) — The government's new rules requiring overtime pay for millions of workers have small business owners facing some hard choices.

Many businesses like restaurants, retailers, landscapers and moving companies will have to transition staffers, many of whom are low-level managers, to hourly pay and limit the number of hours these employees work.

Chad Brooks expects to switch managers at his eight franchise restaurants to hourly pay, and plans to send them home as soon as their shifts are over.

The rules don't cover many employees who are office workers, computer programmers or professionals.

Small businesses lack the large revenue streams and credit lines of bigger companies, so they may struggle to afford the additional overtime costs, particularly those already facing higher minimum wages or increased health care costs.

Some owners will decide that it makes sense to give staffers whose pay is close to the $47,476 threshold a raise rather than face an uncertain overtime bill going forward, says Jonathan Sigel, a labor attorney with the law firm Mirick O'Connell in Worcester, Massachusetts.

Managers used to staying at work until a task is done may feel demoralized when forced to leave work unfinished, says Midge Seltzer, president of Engage PEO, a human resources provider based in Hollywood, Florida.

The staffers are team leaders at the company, overseeing freelancers who transcribe phone calls for doctors, lawyers and law enforcement agencies.