With the latest policies from the Department of Labor, convenience merchants must prepare for stronger enforcement of labor laws. In recent months, the DOL has been occupied with researching and analyzing the practices of convenience store owners. It is important for anyone who owns a convenience store to be aware of the new changes that affect their use of independent contractors and paying overtime to workers. Penalties may be imposed for owners who use independent contractors.
Using the Fair Labor Standards Act, the DOL suggested a new rule that would enhance protection of overtime for more than 5 million workers during the initial year of its commencement. The rule would result in an increase of the salary threshold that is enacted when a worker is not eligible for overtime. The previous threshold was over $23,500 for salaried workers in the 40th percentile. An increase of about $970 per week brings the total past $50,000 every year. However, the DOL was interested in more than just overtime.
After the DOL made its overtime rule proposal, it also released a guidance that was meant to clarify the incorrect classifications of workers as independent contractors. According to the FLSA, the DOL said that most workers were employees and not independent contractors. There was a six-factor test formulated by the guidance to address the issue and determine the status of a worker. Since the potential penalties for the incorrect classification of workers are large, this is a major issue for convenience store owners. In addition to this, the ACA fees and tax code could yield far more expensive penalties.
For example, consider a worker who is wrongly labeled as an independent contractor. If that worker is reclassified as an employee, the result is a lower number of full-time employees receiving coverage offers. The incorrect classification would yield a penalty equaling $2,000 multiplied by the number of full-time employees in the company.
Both DOL changes are important enough for all convenience store owners to review them and understand the terms completely. For c-store business models, the overtime proposal is enough to greatly impact a company’s chances to hire full-time workers. The DOL’s guidance may also result in many companies making changes to their hiring structures. Both actions show that the DOL is taking steps to be proactive in matters of employment. When read carefully, the guidance shows that the DOL is putting employers on notice about strict and intensifying actions they plan to take.
Convenience store owners across the nation should start researching the changes, reviewing their business models and making the changes necessary to comply and continue business operations. Companies choosing to ignore the new rules could face penalties that have the potential to shut down