My brother is a business owner. Just over a year ago, I blogged about him and how Obamacare was affecting small business owners.
Now a new problem. My brother pays his workers $10 an hour (which is $2 per hour higher than minimum wage) plus a percentage of profits that are earned as a result of the worker’s labor. He employs ten, and the highest earning of them made $42,000 this year, meaning that they are making more in profit sharing than they are in salary.
That will come to an end in 2015, when all workers will go to an hourly rate of $14 an hour. Why is that? Is it because my brother is a greedy business owner? No. It is because one of his workers has been sleeping on the clock.
One of his workers was caught taking naps while he was clocked in, and this caused that employee to work more than 40 hours a week. When caught, my brother fired the man. The man filed a complaint, stating that he was not paid properly.
My brother pointed out to the DOL that the employee was paid fully for the time he was on the clock, even while sleeping. The DOL disagreed. They said that ALL funds received by an employee on a regular basis must be a part of the overtime calculation.
What does this mean? Let’s say that your employee makes $10 an hour plus profit sharing. He works 42 hours a week. That means that his “time and a half” overtime rate should be $15 an hour, right?
Wrong. Since the employee got $400 a week in profit sharing, his hourly rate works out to $25 an hour, making his overtime rate $37.50 an hour. So an employee that made $400 in wages and $400 in profit sharing for weeks on end, and then takes a nap and winds up working 42 hours when he oversleeps the end of his shift by two hours, winds up deserving an extra $75 for his two hour nap.
My brother cannot afford this, so profit sharing is coming to an end at his business.
This is why the little guy can’t make it.