Rhonda Abrams

Special for USA TODAY

Beginning in December, about 4.2 million more Americans will qualify for overtime pay under new rules from the U.S. Department of Labor. If you own a small business and have full-time employees, there’s a good chance these rules will apply to you.

Hourly workers, lower-wage earners, and nonmanagerial workers now must be paid 1.5 times their hourly wage when they work more than 40 hours in a week. Under the new rules, overtime will be paid to many more workers, including those on salary.

The new rules increase the minimum salary threshold at which a full-time salaried worker can be exempt from overtime rules from $23,660 to $47,476 annually, or from $455 to $913 weekly.

This level will be adjusted every three years.

Employers can include nondiscretionary bonuses and commissions to comprise up to 10 percent of the salary level.

Here’s some background on the labor law: In the 1930s, in the midst of the Great Depression, workers were often badly mistreated. To help protect workers, Congress enacted the Fair Labor and Standards Act.

The FLSA of 1938 established a maximum number of hours for the regular workweek (44 hours in 1938; 40 hours today). It set an eight-hour workday, established a national minimum wage (25 cents in 1938; $7.25 today), required time-and-a-half pay for overtime and limited child labor.

Exempt vs. non-exempt

The purpose of the FLSA is to protect workers from being exploited, but business needs flexibility, so FLSA exempts bona fide salaried executive, administrative and professional employees and outside sales and many technology employees from overtime pay requirements. After all, it would be silly to require employers to pay overtime to a top corporate executive making hundreds of thousands of dollars a year.

Once a business has an employee, it’s critically important to know whether that worker is exempt or nonexempt:

•Nonexempt employees are covered by FLSA and, by extension, most state and city labor laws. They must be paid at least federal and state minimum wage and receive overtime pay of 1.5 times their regular hourly rate when they work more than 40 hours in a week.

•Exempt employees are not entitled to overtime pay, but must meet certain criteria for pay and job responsibilities.

What drove the change

In 1975, FLSA overtime provisions protected 62 percent of all full-time workers; today, overtime provisions protect only 8 percent of full-time workers.

The minimum exempt salary threshold was last changed in 2004, when rules regarding executive and managerial jobs were loosened, resulting in many more employees being legally considered exempt. Some businesses took advantage of these new rules, resulting in some employees being named “supervisors,” especially in fast food and retail jobs, where they regularly work more than 40 hours a week without additional pay.

On the other hand, many may question the new minimum threshold. After all, a white-collar supervisory or administrative job paying $20 an hour, or about $41,600, may be considered a very good job in many parts of the country.

How to respond

If you employ salaried, full-time workers who are paid less than $913 per week, you’ll need to decide how to respond to these new rules. Some options:

•Keep salaries the same, eliminate or reduce overtime. Be sure to monitor activity and hours to limit overtime.

•Raise salaries to the new minimum, enabling you to require unpaid overtime of qualified employees.

•Keep salaries the same, pay overtime. This is financially beneficial if overtime is limited or irregular and current pay is at the low end of the present minimum. Be careful tracking employees’ hours.

•Lower wages, pay overtime. This results in your expenses staying the same, but will certainly create disgruntled employees and high turnover.

•Hire more employees. If you regularly need a lot of overtime from current employees, you may want to consider hiring additional hourly workers to pick up the extra hours.

Among Rhonda Abrams’ recent books is the sixth edition of “Successful Business Plan: Secrets & Strategies.” Register for her free newsletter at PlanningShop.com. Twitter: @RhondaAbrams.