One of the biggest HR topics last year was the Notice of Proposed Rulemaking in regards to the FLSA Overtime Exemption. While the final rule has not been published, and therefore the standards and amounts are not set in stone, the NPRM has slated that the minimum annual salary threshold for executive, administrative, and professional overtime exemptions will in essence double by increasing from $23,660 to $50,440.
The Department of Labor is planning on issuing a final rule during the spring of 2016, and the effective date of the final rule would be 60 to 120 days after publication; but this is just speculation; thus now is the time to make sure you are prepared.
Below is a check list to get you started on making sure you are ready for the proposed changes. Please keep in mind that every business and industry is different, so this is not a comprehensive list, but rather a good starting point.
- Review employees job descriptions. Are they still accurate? Do the actual job duties fall within the exempt status?
- Identify exempt salaried employees with a salary below $50,440 or $970 per week.
- Identify the true hours worked per salaried exempt employee who makes less than $50,440 yearly. Start having salaried employees, which are below the $50,440 threshold, track their actual time worked if they are not already.
- Determine if it is better to raise the employee’s salary to 50,440 based on the average number of hours they are working, or if it is better to classify them as non-exempt from overtime.
- If reclassifying to non-exempt, determine if you will take their current annual salary and divide it by 2080 (40 hours per 52 weeks a year) to achieve what their new hourly rate may be.
- If employees, who will be reclassified as non-exempt, are consistently working over 40 hours per week, consider if overtime will be allowed or if it will be discouraged, and if so how much will be allowed.
- If you will implement a policy discouraging overtime for employees newly classified as Non-exempt, determine if certain tasks and jobs will need to be reassigned to another employee.
- Determine if additional employees need to be hired as a result of job duty changes, rather than possibly incurring additional overtime.
- Take a look at “remote work” for salaried employees. If employees who are currently exempt will be reclassified as non-exempt, now is the time to look at your policies regarding after work hours business phone calls and emails that are being read and/or responded to.
- Prepare a plan of how to explain the classification changes to employees, and what the changes will mean to them and their paychecks.
Summing it up, look at job descriptions, pay rates near the threshold, and especially at hours worked. If you are unsure of just how many hours those exempt employees are working, now is the time to start tracking them.
For further questions regarding the proposed changes, please contact our HR/Client Services Department at 770-339-0000 or ClientServices@hr-startegies.com. If you are in need of a Time & Attendance solution to track your employees hours, Please contact us at 770-339-0000 or TimeTracker@hr-strategies.com
On June 30, 2015, after more than 15 months of waiting, the 295 page Notice of Proposed Rulemaking (“NPRM”) on overtime and administrative exemptions was released. Though this does not cover the identification and classification of Independent Contractors versus Employees, Wage and Hour Division Administrator David Weil issued an Administrator’s Interpretation letter regarding the status of Independent Contractors versus Employees on July 15th, 2015.
It should not come as a surprise that the WHD has put out Administrator’s Interpretation No. 2015-1, Subject: ‘The Application of the Fair Labor Standards Act’s “Suffer or Permit” Standard in the Identification of Employees Who Are Misclassified as Independent Contractors’, at the same time that NPRM on overtime exemptions has been opened for comment. Both are congruent on each other to make sure that everyone performing duties for an employer are correctly classified. It is also a reminder that there are very specific “rules” to 1099- independent contractors, and that it is not an option to classify as such to possibly avoid the upcoming changes to overtime exempt status. The Interpretation Letter clearly narrows the definition of “Independent Contractor”, and states “in sum, most workers are employees under the FLSA’s broad definitions… The very broad definition of employment under the FLSA as ‘to suffer or permit to work’ and the act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor.” Be warned that the economic realities test regarding Independent Contractors is the main determinative for Employee vs. Independent Contractor, but that no single factor is weighed heavier than another. Rather the qualitative result of all 6 factors determine the outcome of Independent Contractor or Employee.
- The extent to which the work performed is an integral part of the employer’s business.
- The worker’s opportunity for profit or loss depending on his or managerial skill.
- The extent of the relative investments of the employer and the worker.
- Whether the work performed requires special skills and initiative.
- The permanency of the relationship.
- The degree of control exercised or retained by the employer.
As a business you should take this letter as indication for the need to review any arrangements and agreements regarding anyone paid as an independent contractor, to make sure that they do comply with the rules regarding 1099 Independent Contractor status. Though the letter does not state any new legislation or compliance obligations, it may be seen as a foresight that there will be more enforcement to come on the Contractor vs. Employee front.
The EEOC’s Budget has been increasing steadily over the past few years. Most significantly, the 2016 proposed budget requests almost $374 million, which represents an increase of $8.612 million from the 2015 fiscal year appropriation.
The number one objective listed in the EEOC budget proposal? “Combating employment discrimination through strategic law enforcement.”
The EEOC was created as part of the Civil Rights Act of 1964. According to their 2016 Budget, “The U.S. Equal Employment Opportunity Commission (EEOC) is the leading federal law enforcement agency dedicated to stopping and remedying employment discrimination on the basis of race, color, religion, sex, pregnancy, national origin, age, disability, and genetic information or family medical history.”
As their budget increases, so does their ability to investigate more and more claims. Do you know how to recognize a potential claim in the workplace?
We will be discussing the current legal landscape of the EEOC, what is happening in legal cases, and the types of claims won. We will discuss age discrimination, disability discrimination, the ADA, the FLSA, Wage & Hour, and so much more!
At tomorrow’s training, we will be discussing how HR Strategies is mitigating your risk of an EEOC lawsuit and what to do when an employee raises an issue. It’s not too late to register!
Contact us today at 770-339-0000
Executive Actions on Immigration could affect not only an estimated 5.2 million unauthorized immigrants living in the United States, but small business owners and entrepreneurs as well.
Here’s a look at the actions listed to streamline legal immigration, according to the White House Fact Sheet on Immigration Accountability Executive Action:
- Providing portable work authorization for high-skilled workers awaiting LPR status and their spouses.
- Enhancing options for foreign entrepreneurs.
- Strengthening and extending on-the-job training for STEM graduates of U.S universities.
- Streamlining the process for foreign workers and their employers, while protecting American workers
- Reducing family separation for those waiting to obtain LPR status.
- Ensuring that individuals with lawful status can travel to their countries of origin.
- Issuing a Presidential Memorandum on visa modernization.
- Creating a White House Task Force on New Americans.
- Promoting Citizenship Public Awareness
- Ensuring U.S. Citizens Can Serve
- Creating a mechanism that requires certain undocumented immigrants to pass a background check to make sure that they start paying their fair share in taxes.
- Expanding DACA to cover additional DREAMers
With this immigration reform 3.7 to 4.1 million unauthorized immigrants who are parents of U.S. citizens and LPR’s (lawful permanent residents) will have the opportunity to request a temporary relief from deportation and work authorization for three years at a time; if they come forward and meet certain qualifications. To meet the qualifications they must register, have been continuously present in the U.S. for more than 5 years, submit to biometric data, pass background checks, show that their child was born before the date of this announcement, and pay taxes. Again, this is only a temporary relief of three years at a time.
The Executive Action also allows for the expansion of the Deferred Action for Childhood Arrivals; eliminating the age cap that had previously limited the law to childhood arrivals who turned 31 prior to 6/15/12. Just as with the parents mentioned above, continuous presence in the US must have begun prior to January 1, 2010; and will also only be granted in increments of 3 years.
So what does all of this mean for the common small business owner from an HR standpoint?
One thing of importance is that thus far the executive order does not allow this new class of worker to get subsidies under the Affordable Care Act. In fact, the president’s executive order at present does not extend to the ACA eligibility in anyway, there for these employees won’t count towards your 50 employee of more threshold quota.
Some theorize that many of these individuals will step forward to claim a legitimate work status; thereby using an Individual Taxpayer Identification Number to contribute to the social security system and pay taxes. However, employers may also see an increase in employment lawsuits or more union organizing, as this new population of workers who have been silent at the worksite begins to speak out in regards to their grievances; ranging from harassment, discrimination, and lack of overtime pay. Be sure that these employees who may not have been given vacation time, and other benefits in the past, will now have the same expectations as the other employees.
However, it is expected that many of the immigrants who could seek relief will not do so, as they realize that this is “temporary” and not legislation. Additionally, while receiving amnesty (even temporarily) may seem enticing, many will choose to forego applying, to avoid paying the application costs, and having to pay taxes.
There are sure to be several new guidance’s issued in the coming weeks from the Department of Labor in coordination with other agencies, such as the United States Immigration and Customs Enforcement, regarding the new executive actions; and as with anything new there are bound to be greater audits and regulatory checks. Businesses may want to entertain the idea of doing their own proactive audit and recheck their employee’s documents, legitimizing the work statuses of employees, even if you think they have passed previously. Remember that any employee who presents new forms of identification should also complete a new I-9 form. Most importantly of all, remember not to take any discriminatory or retaliatory actions against any workers as it relates to the new immigration orders.
From April 1, 2013 to March 31, 2014 a record number (8,126) of FLSA cases have been filed across the country. This represents nearly a 5 percent increase from the year before, and the seventh straight year of increases. In fact, the number of cases filed has risen 438% since the year 2000. Astonishingly enough, these numbers only capture half of the picture as they represent only the federal cases, and not any wage and hour lawsuits filed within the individual state courts. Unfortunately for business owners, the number of cases being filed is expected to continue to rise with the speculation of raising the minimum wage and tightening the regulations on white collar overtime exemptions. HR Strategies can help you reduce your risk and vulnerabilities to a FLSA regulations lawsuit, along with the many other Federal, State, Local and Professional Regulatory changes. Call us today to relieve your stress of whether or not you are in compliance; and give yourself the ability to focus on the aspects of your company for which you went into business, while we handle the behind the scenes issue of compliance. 770-339-0000