Know the new law on overtime pay

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in Small Business Tax

Q: I own an auto repair shop in Maryland. We've switched our compensation plan to a system in which technicians are paid a base salary, plus a bonus based upon billable hours. Since technicians routinely work a 45-hour workweek, must we pay them any overtime? R.B.S., via e-mail

A: The basic rule is that employees are entitled to overtime pay if they work more than 40 hours in a workweek, unless their job duties meet a special executive, administrative or professional exemption. If they do qualify as "exempt" employees, they wouldn't be due overtime pay. (If their annual pay is below $23,660, they must be eligible for overtime pay.) The U.S. Labor Department rewrote the rules last year regarding who is considered exempt. Auto technicians aren't likely to qualify as exempt employees, so you'd probably be required to pay overtime to such workers. To be sure, compare their duties at the Labor Department Web site for these new rules, www.dol.gov/fairpay. Tip: State laws may supersede the federal overtime laws.

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