How Labor Laws Put Strain on Contractors

Labor is often the largest budgetary line item for a business and there is a lot of debate over what constitutes a fair wage. Starting pay is a critical deciding factor for workers and competitive salaries are one of the strongest retention strategies for building service contractors. Yet, the biggest reason team members leave is for more pay elsewhere.  

Remaining fair and competitive has been a challenge for BSCs, and it's about to get even more difficult. As of January 2024, nearly half of the country had implemented substantial minimum wage increases. This not only impacted contractors in those states, but also any BSCs in the surrounding areas who wanted to remain competitive and retain staff.  

With little time to adjust, BSCs have now been hit with a new overtime rule impacting salary workers. The Department of Labor ruling starts July 1 and states that staff making less than $43,800 a year will be eligible for time-and-a-half for any overtime work — the previous threshold was an annual salary of $35,500. On January 1, 2025, this number will increase to $58,600/year.  

The ruling is expected to put substantial strain on business owners already experiencing tight margins. And as if stomaching that isn’t tough enough, the new rule also cautions owners to watch for additional increases every three years.  

These increased thresholds aren't ideal for BSCs. You can bet owners will be keeping a closer eye on timekeeping, but many will also be forced to reassess staff workloads and salaries. Those who struggle to adjust will have to pass down expenses to customers, which could impede any competitive advantage over the competition.