On December 1, Are You Ready for the New Overtime Laws?

In a few short weeks, most startups and small businesses will be required to either raise the salaries of employees making less than $47,467.00, or else risk paying overtime wages.

Effective December 1, 2016, updates to the Fair Labor Standards Act are significantly limiting the category of employees who can be classified as “exempt” from compulsory overtime laws.  Unless employers are prepared to meet the new salary threshold, employees who were previously ineligible for overtime pay will now be categorized as “non-exempt” and entitled to time and a half for any hours worked in excess of a 40 hour work week.

The key updates can be summarized as follows:

  • The Department of Labor has set the new standard salary level at $913 per week or $47,476 annually (previously, the salary level was $455 per week or $23,600 annually).
  • Employers will be allowed to use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new salary threshold.

What does this mean for businesses?  At a high level, the new rules require employers to evaluate employees in the range of $23,600 – $47,400 and determine the most cost effective compensation structure compliant with the new rules.

For some workers, employers may determine that it is more affordable to reclassify them as “non-exempt” (and therefore eligible for overtime wages) rather than raise the salary in order to meet “exempt” status.  As a consequence, the amount of overtime hours will have to be closely monitored (or eliminated altogether) to ensure payroll margins remain justified by that approach.

Some employers may prefer to designate one or more “exempt” employees (who already make above the statutory threshold) to serve as the “on call” point of contact for any customer needs or work obligations that arise after regular business hours.  This way, overtime wages can be avoided altogether without a forced salary adjustment.

Although a solution in only rare cases, some employers may be able to convert employees to an independent contractor relationship.  This would allow employers to circumvent the overtime obligations under the FLSA, altogether.  However, caution should be taken here to ensure that workers are properly classified, as employers face significant consequences for improper independent contractor designations.  More information about the proper classification of employees and independent contractors can be found HERE.

For more information about these rule changes and other strategies to mitigate the cost of compliance, it is best to speak with an attorney.

Seven Must Know Facts About Patents

Here’s 7 Things to know about Patent Rights – #4 is what most people DON’T know, #1 is the most important to know, and #7 reflects a recent change to our patent laws.

1. First Come, First Served:  The US patent system will only award a Patent on an idea or invention to the first inventor who files a patent application.  If you aren’t the first to file, you risk losing your patent rights.

2. The Clock is Ticking: If you don’t file a U.S. Patent Application within 12 months of public disclosure (such as sharing your idea with others) or within 12 months of offering your invention for sale, you lose your patent rights.  Even still, the longer you wait, the greater the risk of someone else filing a patent application for the idea you came up with first.

Important Note: Although the US gives you a 12 month period to file a patent application after your first public disclosure/offering for sale, most other countries in the world do not.  This means, in those countries, you will have lost your patent rights if you’ve made a public disclosure before first filing a patent in at least one country.

3. Filing a Provisional Patent Is a Great Place To Start: It’s affordable and it’s an essential take away from these 7 facts.  A provisional application secures your priority date (your spot in line) to the patent rights while you develop your idea, market it, and raise funding.  This helps to ensure that no one will beat you the patent office.

4. Put the Public on Notice:  Simply put, once you have a patent or patent pending status, tell everyone about it.  The traditional way to do this was to write your patent number on your product.  However, now this can be done virtually (See Fact 5).  Notice is crucial, because if you don’t provide notice of your patent (or pending) rights, then you aren’t entitled to monetary compensation from competitors who have been infringing your patent rights under your radar.

5. Virtual Patent Marking Makes Things Easy:  Recent updates to our patent laws allow for a “Virtual Patent Marking”.  This simply means that you can now put the public ‘on notice’ of your patent rights over the internet.  If done correctly, you satisfy your notice requirement, and you no longer have the burden of constantly monitoring and notifying your competitors one-by-one.

TIP: The Patent Seal™ is a Virtual Patent Marking certificate issued by licensed patent attorneys that you can use to meet the Legal Notice Requirements under 35 U.S.C. § 287.  Just place the Patent Seal™ Virtual Patent Mark on your website. When your website visitors click on your Patent Seal™, they will be directed to a certificate detailing your intellectual property rights.

6. The more you wait, the more you lose:  It could take months, if not years, to discover and locate people who infringed on your patent.  By the time you find these infringers and put them on notice of your patent rights, they may have made substantial profits from your idea.  Moreover, you won’t be entitled to any of those profits unless you can prove that the infringers had notice of your patent rights.  The Virtual Patent Mark is a legally recognized form of ‘public notice’ that will entitle you to a portion of the infringers’ revenue, even if you didn’t provide them with notice directly.

If you are interested in more detail related to your situation it is best to speak with a patent attorney.