A recent mandate by President Obama has raised the minimum wage for federal employees to $10.11, encouraging states to also raise their minimum wage and spurring debate in Congress to raise the private sector’s federal minimum wage. To small business owners in the private sector, the possible rise in employee minimum wage is a concern as businesses struggle to balance added costs and profit margins. However, talks on amending employee compensation have not ended at hourly minimum wage alone.

As part of the labor discussion, President Obama has also proposed that the U.S. Department of Labor consider raising the salary floor for overtime eligibility. Currently, salaried employees are exempt from overtime compensation if they earn at least $455 dollars per week or $23,660 per year. With a raised floor, a larger number of salaried employees with a higher wage would also be eligible for overtime. As small business owners face these possible new changes, many considering different strategies to help cover costs, including hiring fewer employees or shifting salaried employees to hourly wages. Upon release of their recommendations for the changed policies, the U.S. Department of Labor will open the floor for public comment.

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