Risk & Business

With the new overtime regulations just signed by President Obama, small business owners should get ready for the headache that is about to hit. Business owners now have to pay overtime for salaried workers that make under $47,476 a year. This will surely put pressure on small companies and will result is the aforementioned headache.  Labor costs will go up immediately as companies comply with the regulation. Litigation against employers will also go up as record keeping errors and disputes over wages and hours will result. So what will small business owners do?  Many will reduce staff to help pay for the additional costs. Some will move people into part time status. Many will also put a freeze on hiring. For the salaried workers it will trigger higher wages. The Labor Department estimates that over 4.2 million people will see raises due to this regulation. Unfortunately, this will most likely not happen. Small businesses will adapt to keep their labor costs down in order to stay in bus

In the early part of the 20th century the work comp system was started as the ultimate bargain between employees and employers. Employers would buy insurance to take care of injured workers and the workers would no longer have the right to sue their employers for thier injuries. This system has worked great for many, many years. However changes are starting to happen to the system as employers are looking to reduce the tremendous costs of work comp. Medical costs increases and litigation are driving the continual rise of work comp premiums. Employers are now looking to opt out of the work comp system to take control of these costs. Many states have statutes that allow this to occur. The risk to employers is that they no longer have the protection of not being sued by employees that the current work comp system gives them.  The risk to employees are they lose their protection of having a guaranteed mechanism to pay for their on the job injuries. It is going to be interesting to see how