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Here's the thing. There's conjecture, and then there's what's really happening. I'll fill you in on what's really happening. This was a business purchased for my husband's son to run and eventually take over -- providing him his inheritance while we're living. We would continue to own it, with my husband doing all the back-office functions for no salary until we paid ourself back for our initial investment. Then it would be turned over to the son. We anticipated this would take 2-3 years. It's a small business. Very small. When operating at the target volume, it can provide a working owner-operator a decent living in a small southern town. Probably about $30-40K a year. Unfortunately, the son crashed and burned personally and almost took the business down with him.
We live 1,300 miles away.
We were fortunate that the one other full-time employee had management experience. Son got removed from everything, new manager got a raise and got put on salary, and got the keys to the store. We closed Mondays so he would have at least some time off. He's doing a great job. We're building the business back up little by little. When we have a good month, we give him a bonus.
Nobody is paid under the table. There is liability and workers comp insurance. We're doing this the right way. Doing things the right way has a cost. But the business isn't leveraged in any way. Rent is very low because of a landlord who wants there to be small businesses in this small town. We're in the process of building up the business cash reserves again, after using our personal cash to keep it afloat while son was running it into the ground. As sales goals are met, we plan to give the manager raises and/or bonuses.
If the FLSA rule makes it through the gauntlet, we'll convert the manager to hourly and pay him overtime for hours beyond 40. It will still be miles below the 4x,xxx threshold, but will be in compliance.
So, what I hope you can see from this is that all business owners aren't some sort of greedy, faceless components of the capitalist Borg. We could have written off our investment, auctioned the equipment and walked away. But we decided to keep it open. That means one f/t position and 2-3 p/t positions in a poor, rural area. It means pizza for folks in the same area. It's what true small business is. A lot of work, a lot of struggle, and a little reward. Nothing more than that.
For true mom-and-pop businesses, it's not going to be easy to absorb the additional cost. We have a small-town pizza restaurant. If we increased the manager's salary to the $42,xxx threshold, it would erase all profits. There would be no reason to keep the store open.
I've been crunching the numbers, trying to figure out how to handle it. Logic would dictate cutting back his hours and hiring another manager for two days a week. But who do we find to manage a small-town pizza shop two days a week, part-time? We could go with two full-time managers on staggered schedules. But then the (increased) payroll budget is wholly consumed by two people, and there is nothing left to pay for the additional staff (bodies) needed on nights and weekends.
You're anonymous. How about giving us some real numbers. What you are telling me here is that you work your manager seven days a week for peanuts. The threshold is not 42K it is 47K. How many slices and pies do you sell a day and at what price. What percentage do you make on sodas.
You've given us the Chamber of Commerce answer and by now you should have made enough under the table to buy the building.
Here's the thing. There's conjecture, and then there's what's really happening. I'll fill you in on what's really happening.
I think that I tried to be clear that I was firmly in the realm of conjecture. Thanks for filling in the story, most posters don't.
With that being said, I will stick with my assertion that your business is barely viable. An owner/operator surviving on a draw of $30-$40k is a pretty meager living. That is the most optimistic version. Running a business from 1300 miles away, relying on one key employee to keep it running, who you pay probably $30k or less (based upon your statement that with OT s/he would make much less than $40k with OT) is really, really risky.
I understand how you got there. It doesn't make any difference.
Quote:
So, what I hope you can see from this is that all business owners aren't some sort of greedy, faceless components of the capitalist Borg. We could have written off our investment, auctioned the equipment and walked away. But we decided to keep it open. That means one f/t position and 2-3 p/t positions in a poor, rural area. It means pizza for folks in the same area. It's what true small business is. A lot of work, a lot of struggle, and a little reward. Nothing more than that.
I didn't mean to imply you were a greedy capitalist. I have owned 3 different businesses myself and I am starting a 4th. All classic small businesses. For your worker though, does greed or necessity make much of a difference? Based on what you have said, you are paying somebody $25-30k on a salary basis and they are working more than 40 hours weekly. That comes to an actual hourly rate of maybe $12/hour, could be less. Reasons don't matter much when it comes to that persons quality of life. They are working long hours for little pay.
For the record, although you quoted me in your reply, I was not the person who implied that you were avoided taxes or paying anybody under the table.
"The FLSA applies only to employers whose annual sales total $500,000 or more or who are engaged in interstate commerce."
Interstate commerce is a HUGE factor. The OP who owns a business across state lines is engaging in interstate commerce simply because they operate the business from a different state. Most businesses order supplies of equipment from out of state vendors, or deal with an out of state bank or credit card processor. Maybe the phone company has a payment lockbox in a different state.
The number of people who can skate by on that exemption is practically non-existent.
Teachers, along with doctors and lawyers, are not subject to the minimum salary requirements to be classified as Exempt. So if a teacher is currently earning a salary of $45K per year, that teacher can still be classified as Exempt, under the new threshold, without giving that teacher a raise.
I will have to revisit the Fair Labor Standards Act of 1938.
Quote:
Originally Posted by ged_782
Teachers, along with doctors and lawyers, are not subject to the minimum salary requirements to be classified as Exempt. So if a teacher is currently earning a salary of $45K per year, that teacher can still be classified as Exempt, under the new threshold, without giving that teacher a raise.
So does that mean that these managers who need to use independent judgement every day could be classified as professionals? Thus making them exempt anyway?
I know that Bush the Lessor tried to reclassify Carpenters as managers if they had an apprentice. The unions didn't go for that.
Does anyone know if the money 47 thousand and change is the bottom line in this directive or are there a dozen loopholes as usual?
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I'm no big thinker, but I think it gives them the ability to give part timers a full time wage easier. Not a bad thing, except for the lack of benefits.
It may help displace already full time workers, by making promotions available to workers who are selected to cover the hours. They earn less, expect less, but appear to be the most productive.
So does that mean that these managers who need to use independent judgement every day could be classified as professionals? Thus making them exempt anyway?
I know that Bush the Lessor tried to reclassify Carpenters as managers if they had an apprentice. The unions didn't go for that.
Does anyone know if the money 47 thousand and change is the bottom line in this directive or are there a dozen loopholes as usual?
The bottom line is that workers who are earning at least $23,660 per year, and are properly classified as Exempt under FSLA rules, will need to earn at least $47,476 per year, in order to maintain their Exempt status, with the aforementioned exception for teachers, doctors, and lawyers.
For example, a manager currently earning $45K per year, and is currently classified as exempt, would now have to be classified as Non-Exempt, and entitled to overtime pay (basically, they would become hourly), or the employer could opt to raise their salary above the new wage threshold, and keep that manager's status as Exempt. That manager's duties qualifies that person to be Exempt, but at $45K per year, they will fall below the new threshold for the Exempt classification. Same thing with employees who are Exempt, because their duties are administrative or professional. If they fall below the new salary threshold, they are going to be Non-Exempt, and entitled to overtime pay.
Interstate commerce is a HUGE factor. The OP who owns a business across state lines is engaging in interstate commerce simply because they operate the business from a different state. Most businesses order supplies of equipment from out of state vendors, or deal with an out of state bank or credit card processor. Maybe the phone company has a payment lockbox in a different state.
The number of people who can skate by on that exemption is practically non-existent.
I was under the impression that a business whose sales are strictly in-State, were not engaging in interstate commerce.
For example, and independently-owned pizzeria, whose revenue is derived from products that are sold only in person from a single location, or locations all in one State, would qualify as a business not engaging in interstate commerce. The fact that some of their vendors or suppliers are located or headquartered out of State, would be irrelevant. But then again, I'm not an authority on such matters.
If indeed interstate commerce is defined as you describe, then yes, virtually every business in the country, from the Fortune 100, to the smallest local mom-and-pop, is engaging in interstate commerce.
Does anyone know if the money 47 thousand and change is the bottom line in this directive or are there a dozen loopholes as usual?
Ged782 has it correct.
Another way of saying it is that all the same loopholes currently exist, except that exempt employees need to earn $47k, not the existing $23k threshold. If you earn less than $47k, you cannot be classified as exempt. If you earn more than $47k, you might be exempt, you might not be exempt.
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I will have to revisit the Fair Labor Standards Act of 1938.
