If you’re signing up for next year’s workplace 401(k) plan benefits, now is the best time to develop a strategy for increasing your savings.
Benefits season also happens to coincide with the annual IRS release of the 2021 maximum contribution limits for certain tax-advantaged accounts, including your 401(k) plan, individual retirement account and healthcare flexible spending accounts.
Uncle Sam updates these figures around this time each year to reflect inflation.
The Basic Rules
Under the federal Fair Labor Standards Act (FLSA), an employer can generally reduce exempt employees’ regular salary for COVID-19-related reasons. However, the reduction cannot be made after the fact or based on the employer’s day-to-day or week-to-week needs, according to the DOL.
“In other words, exempt employees must be paid their predetermined salary for any workweek in which the employee provided any services,” said Lisa Reimbold, an attorney with Clark Hill in Los Angeles “As such, any pay reduction for an exempt employee can only apply to future workweeks.”
The FLSA requires most businesses to pay employees 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek, unless employees fall under an exemption. The most common exemptions are administrative, executive and professional, which are collectively called white-collar exemptions.
To read more, click here.
President Trump’s payroll tax deferral plan allows employers to suspend collection of the employee’s Social Security payroll taxes is in effect through Dec. 31. Below is a summary of the IRS issued guidance on the repayment of deferred employee Social Security taxes under President Trump’s Executive Order signed on August 8, 2020.
Employers should consider the following if you decide to partake in the tax deferral:
• Participation is optional for employers and there are no penalties for noncompliance. The tax deferral applies to employees whose wages are less than $4,000 for a biweekly pay period, including salaried workers earning less than $104,000 per year.
o Note this is figured on a pay period by pay period basis, which means an employee could qualify one pay period and not the next due to fluctuations in pay, like overtime.
• The deferral applies to wages paid starting on September 1, 2020, not wages earned. In other words, any paycheck dated September 1, 2020, through December 31, 2020, is covered.
• The deferred amounts must be collected between January 1, 2021, and April 30, 2021. If the entire amount is not recouped by May 1, 2021, interest and penalties will ensue.
• Employers can fulfill this obligation by collecting additional taxes from the workers’ paychecks early next year. Employers should explain to employees that this collection will result in smaller paychecks during the first four months of the year.
• Employers can make “arrangements” to collect the total tax due from employees. No detail is provided on what “arrangements” may be.
• If an employer chooses to suspend withholdings and an employee leaves the company before repaying the deferred taxes, the employer is still liable, but the due date is just extended to the next year.
Until further clarity on the guidance is available, employers who receive requests from employees to withhold Social Security taxes or who wish to suspend withholdings under the deferral program should first speak with their tax expert or tax attorney.
Additional information can be found here:
https://www.irs.gov/newsroom/guidance-issued-to-implement-presidential-memorandum-deferring-certain-employee-social-security-tax-withholding
For further information regarding the guidance under this notice, please call the Notice 2020-65 Hotline at (202) 317-5436 (not a toll-free number).
Effective January 1, 2018, the minimum wage increased from $8.10 to $8.25 per hour for most employees in Florida, with exceptions for tipped employees, some student workers, and other exempt occupations. The federal minimum wage is $7.25.
The annual calculation is based on the percentage increase in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers in the South Region for the 12-month period prior to September 1, 2017. The Florida minimum wage was $8.05 per hour in 2015, $7.93 per hour in 2014, $7.79 per hour in 2013, and $7.67 per hour in 2012. Due to the inflation and cost of living formula used, a minimum wage increase did not occur in January 2016.
The Federal Fair Labor Standards act defines special minimum wage rates applicable to certain types of workers. Employees may be paid under the Florida minimum wage if they fit into one of the following categories:
Download the updated Florida Minimum Wage Poster here.
An employer found liable for intentionally violating minimum wage requirements is subject to a fine of $1,000 per violation, payable to the state.
Need help ensuring your Human Resources and Pay practices are up to date? Contact our HR team today!
One of the biggest challenges employers face is recruiting good employees to round out their teams. In South Florida where we operate, the marketplace for talent is beyond cut throat competitive. There are reasons for this of course, we have a large immigrant population where there is always someone willing to “work for less”. We also have a large percentage of jobs in the low-paying tourist and service industries. Couple these factors with a Republican dominated Legislature which works mostly for the state’s business community and you get a market with an overabundance of low-paying jobs and a healthy supply of labor to sustain it.
The U.S. Bureau of Labor Statistics Occupational Employment data, for the year 2015 show the Orlando-Kissimmee-Sanford metropolitan area had the lowest median pay among the country’s 50 largest employment centers, according to an analysis by FloridaPolitics.com. Miami’s pay rates take the second-lowest spot.
According to the BLS, the average median pay, annualized [meaning workers are assumed to be working full time, all year, at the rates of pay reported to the feds] for all occupations was $31,990 in Miami. Sometimes, in order for you to acquire the best talent available and take your company to the next level- you simply have to pay up for it. And yes, if you pay more than your competitors or above market average for some key positions in your company you will get better results.
Read more here:
http://money.cnn.com/2017/07/11/news/economy/job-skills-gap-employer-pay/index.html?iid=hp-grid-dom
Last month LendEDU reported that almost half of all college students surveyed believe they will be entitled to student loan forgiveness. Most of them will be disappointed to find out that this isn’t true. Public Service Loan Forgiveness (PSLF) was designed only for those employed in certain professions. Generally, employment with the following types of organizations qualifies for PSLF:
Contrary to popular belief, this program doesn’t simply wipe out college loan debt. The PSLF was designed to forgive the remaining balance on Direct Loans after 120 qualifying monthly payments have been made while working full-time for a qualifying employer.
If you’re a non-profit and a qualifying employer, you need to be prepared to assist your employees and understand the information being requested. If you’re not a qualifying employer, you also need to be prepared to share this information with your employees as the misconception about who is eligible seems, at least according to this recent survey, to be overwhelming!
The process for borrowers begins with employer certification. If you’re like many employers, you have not yet prepared to handle employee requests for loan forgiveness. October of 2017 is the date when the first borrowers will become eligible for PSLF, but many employees are submitting requests ahead of time to find out how close they are to qualifying.
At minimum, we suggest a few simple steps to prepare for employee requests related to the PSLF:
PSFL Program is not new, but this is the first year that employees can begin receiving loan forgiveness. Don’t wait until October, when the Program is sure to receive increased media attention, to consider how you will respond to employee requests!
Unless you’re a benefits or retirement manager, you probably have not paid much attention to the Department of Labor’s Fiduciary Rule announced last April. One of the rule’s goals was to put an end to the billions of dollars a year that investors are estimated to waste paying exorbitant fees. According to InvestmentNews.com, “The idea is that the regulation will stop advisers from putting their own interests in earning high commissions and fees over clients’ interests in obtaining the best investments at the lowest prices.”
In short, the DOL’s definition of a fiduciary requires that financial advisors, salespersons, planners, agents and brokers act in the best interests of their clients, put their clients’ interests above their own and clearly disclose all fees and commissions in dollar form. The rule creates a much greater level of accountability than salespersons and others have seen in the past and would have had a significant impact on those who rely on commission based sales. Retirement planning for defined contribution plans (401(k), 403(b), employee stock ownership), defined benefits plans (pension plans) and IRA’s could have seen significant changes.
On February 3, 2017, President Trump signed an Executive Order delaying the rule’s implementation by 180 days (6 months). This order includes instructions for the DOL to carry out an “economic and legal analysis” on the rule’s potential impact. The memo also stated that if the DOL concludes that the regulation hurts investors or firms, it can propose a rule “rescinding or revising” the regulation. Acting U.S. Secretary of Labor Ed Hugler issued a statement following the release of President Trump’s memorandum on the Department of Labor’s Fiduciary Rule that said only “The Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.”
For now, this means that retirement investments and planning will continue as is. Although the battle to implement the rule took six years, it will come as no surprise if it is rescinded in less than six months’ time. A potential win for the financial services industry, a potential loss for retirement investors.
Approximately 4.3 million low-wage workers across America are slated to experience a pay increase across 19 states this week, is your state one of them?
You will find more statistics at Statista
Are you one of the lucky ones getting a year-end bonus? Many companies appear to be in a generous mood this holiday season, at least when it comes to providing bonuses to their employees. A recent survey conducted by Accounting Principals found that 75%of the companies surveyed planned to give out a year-end bonus or gift. This is up from 67% last year. About half of those awarding bonuses plan to give a traditional monetary bonuses based on company, department, or employee performance.
Survey results also show that companies are feeling somewhat more generous this year than last, with the average expected bonus to be $1,081, up from $858 in 2015. That’s a 25% increase! While a third of survey respondents planned to give workers bonuses of $1,000 or more, most planned to give between $100 and $500.
While a tradition in many places, some employers often question whether, when and how to offer holiday or year-end bonuses to employees. The decision to give a bonus – and the size of that bonus – may be tied to the company’s overall performance. Tradition or not, bonuses are gifts, not entitlements. If bonuses are a tradition in your workplace and you decide not to offer a bonus for financial or other reasons, you should communicate that fact to your employees as soon as possible since some may be making plans for that money (Think Clark Griswold & the Jelly of the Month Club!).
Whether large or small, cash or a gift of another kind, these bonuses are not commissions as a form of payout for sales or performance. A bonus is a discretionary gift to employees, usually to say thanks for a job well done. Even though a bonus is designed to say thanks, it is still a form of compensation and, with that, comes certain rules.
As with other forms of compensation, bonuses must be nondiscriminatory. In other words, eligibility criteria for bonuses must be applied in a nondiscriminatory way, and employees who are bonus eligible must receive nondiscriminatory amounts. HR360 recommends using a “standard grading system to measure employee performance fairly and consistently, and to document your reasons for offering a particular reward, including specific examples of performance.”
Of course, end of year bonuses also come complete with tax implications for both the giver and the recipient, making that monetary gesture of gratitude slightly less appealing from certain perspectives!
If you need help with payroll administration of bonuses or determining the tax impact, give us a call. We hope you are among the many who will receive a year-end bonus this year!
It’s late November and the expectations placed on a human resources blogger this time of year usually aren’t very high. Social norms dictate that we come up with a list of the “Top Ten Things” we’re thankful for in the office or some sage advice on how to throw a fun holiday party that doesn’t end in litigation or termination. But this year is different. This year the news is a little too big to focus on best practices to prevent HR headaches after the office festivities.
We just elected a new president. Chances are you’re either still celebrating or still in shock. President-Elect Trump made many campaign promises and, while we don’t know yet which ones he will deliver on, several key promises will directly affect employers. Among the safe predictions are a focus on immigration worksite enforcement and sweeping changes and/or a total repeal of the Affordable Care Act. Another prediction is lifting the new payroll threshold for overtime.[1] It’s this last item that has caused many to breath of sigh of relief. But don’t breathe too deeply!
According to SHRM, President-elect Trump can’t do much about the “December 1st effective date of the new overtime rule, which doubles the exempt salary threshold under the Fair Labor Standards Act (FLSA) to $47,476.[2]” Even if it was a top priority of the new administration, changes would take a very long time thanks to the notice-and-comment period required by law.
So for the time being, we all need to be prepared to follow the overtime rule as written. It does appear that Trump is open to the idea of calling for a small-business exemption to the rule after he takes office in January, but by then businesses will have already made a lot of changes to comply with the rule.
It’s also possible that Trump will decide to leave the rule stand as-is. While Trump did say in a brief interview on the campaign trail that he favored a small-business exemption, any changes to the current rule could negatively impact some of his supporters, many of whom could earn more once the rule is in place.[3]
There are many HR regulations that could see sweeping changes under a Trump administration: Minimum Wage, FLSA, Pay Equity, Family Medical Leave and Health Insurance just to name a few. All were things discussed on the campaign trail at one point or another…but will they all be changed? Much like this election, it’s nearly impossible to predict!
Our job will require something much harder than predictions. As HR Professionals, we will need to determine what the changes mean to our own organizations and which will mandate action. If we’ve already reclassified employees based on the overtime rule, will be reclassify them again if the rule is changed? Sure, it would be allowed by law, but would it be the best thing for our organization? What is legal and what is right are not always one in the same.
Don’t think about it too much… or that fourth drink at the office party will seem completely reasonable!
What potential HR changes are you looking forward to under the new administration? We’d love to hear from you. Post your comments below.
[1] http://www.hreonline.com/HRE/view/story.jhtml?id=534361418
[2] https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/trump-overtime-rule.aspx
[3] http://www.hreonline.com/HRE/view/story.jhtml?id=534361495
We just elected a new President. Chances are you’re either still celebrating or still in shock. President-Elect Trump made many campaign promises and, while we don’t know yet which ones he will deliver on, several key promises will directly affect employers. Among the safe predictions are a focus on immigration worksite enforcement and sweeping changes and/or a total repeal of the Affordable Care Act. Another prediction is lifting the new payroll threshold for overtime.[1] It’s this last item that has caused many to breath of sigh of relief. But don’t breathe too deeply!
According to SHRM, President-elect Trump can’t do much about the “December 1st effective date of the new overtime rule, which doubles the exempt salary threshold under the Fair Labor Standards Act (FLSA) to $47,476.[2]” Even if it was a top priority of the new administration, changes would take a very long time thanks to the notice-and-comment period required by law.
So for the time being, we all need to be prepared to follow the overtime rule as written. It does appear that Trump is open to the idea of calling for a small-business exemption to the rule after he takes office in January, but by then businesses will have already made a lot of changes to comply with the rule.
It’s also possible that Trump will decide to leave the rule stand as-is. While Trump did say in a brief interview on the campaign trail that he favored a small-business exemption, any changes to the current rule could negatively impact some of his supporters, many of whom could earn more once the rule is in place.[3]
There are many HR regulations that could see sweeping changes under a Trump administration: Minimum Wage, FLSA, Pay Equity, Family Medical Leave and Health Insurance just to name a few. All were things discussed on the campaign trail at one point or another…but will they all be changed? Much like this election, it’s nearly impossible to predict!
Our job will require something much harder than predictions. As HR Professionals, we will need to determine what the changes mean to our own organizations and which will mandate action. If we’ve already reclassified employees based on the overtime rule, will be reclassify them again if the rule is changed? Sure, it would be allowed by law, but would it be the best thing for our organization? What is legal and what is right are not always one in the same.
What potential HR changes are you looking forward to under the new administration? We’d love to hear from you. Post your comments below.
[1] http://www.hreonline.com/HRE/view/story.jhtml?id=534361418
[2] https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/trump-overtime-rule.aspx
[3] http://www.hreonline.com/HRE/view/story.jhtml?id=534361495
In the month since we’ve written about Florida’s Tipped Minimum Wage, the US Department of Labor (USDOL) reported that three separate Restaurant owners were required to pay a combined $1.3 Million in back wages and damages due to workplace practices that were in violation of the Fair Labor Standards Act (FLSA). The scary part of these stories is not in the amounts awarded, but the idea that these practices are so commonplace that we don’t even realize we’re breaking the law.
One of the larger awards, more than a half a million dollars, was the result of owners who required servers to contribute a portion of their total tips back to the employer, who then distributed the money to cooks and dishwashers who were not tipped employees. Consequently, the employer paid servers less than the federal minimum wage of $7.25 as required. Additionally, the restaurant failed to pay required overtime wages to employees when they worked more than 40 hours in a week, and did not keep accurate records of all hours worked.[1]
Another large penalty, also over the half million mark, was to a restaurant owner who also fell victim to the practices mentioned above but, among other things, required servers and bartenders to pay for breakages, customer walkouts and ordering errors out of their tips, which reduced their pay to below the federal minimum wage. Employees were also required to work without pay at charity events.[2] The charity events idea is always a great discussion, because we can argue that the employees volunteered. That argument would not likely stand a chance, however, as the FLSA hardly ever permits employees to volunteer unpaid time to the employer!
The USDOL’s Wage and Hour Division reports that these issues are found across the nation. In addition to the violations mentioned above, the Division adds that it is common for them to find employers who are requiring employees to work exclusively for tips with no regard to minimum wage standards, taking illegal deductions from wages for credit card transaction fees and paying straight time for hours over 40.[3]
For the past month, Florida Restaurant Owners have been mostly lucky – none of the cases above were in our home state! However, earlier this month the Division announced that it will expand outreach, education and enforcement in the industry to more cities and states. While you never know when and if they might visit you, don’t wait to get things in order. Review your pay practices now to ensure you’re in compliance with FLSA. If you’re still unsure, contact your payroll professional today.
[1] https://www.dol.gov/newsroom/releases/whd/whd20161011
[2] https://www.dol.gov/newsroom/releases/whd/whd20160926-0
[3] https://www.dol.gov/newsroom/releases/whd/whd20161004
Each year by October 15th the State of Florida determines what the following year’s minimum wage rate will be. Take a minute to check your calendar – we can expect this announcement soon! While many would like to think these decisions are completely left to politics and protesters, the minimum wage determination in Florida is actually made using a formula that ties the minimum wage to the consumer price index (CPI).[1]
Last October it was announced that there would be no minimum wage increase in Florida for 2016. The decision was a surprise to some, especially those in the hospitality industry which contains a large number of the state’s minimum wage workforce. However, since Florida has already established a minimum wage higher than the federal minimum, news of a flat year was welcomed by employers.
Employers in the hospitality industry have come to terms with Florida’s higher-than-federal minimum wage, but many struggle with the tipped minimum wage and how to ensure compliance when paying tipped employees. The current minimum wage in Florida is $8.05 per hour, with a minimum directly paid wage of at least $5.03 per hour for tipped employees (with tips making up the difference).
Thus, in Florida, the employer can claim $3.02 toward the $8.05 minimum wage as long as the employee actually receives $3.02 in tips per hour. If the employee does not receive $3.02 per hour in tips the employer must pay the difference so that the full minimum wage is met.
While we wait to see if the state minimum wage (as well as the tipped minimum wage and tip credit amounts) will change for next year, now is a good time to review related Department of Labor Rules.
To begin with, employers must provide tipped employees specific information from the start of employment[2]:
Two aspects seem to be at the root of many tipped minimum wage and hour disputes: Dual jobs and tip pools.
Many employers don’t consider their tipped staff to have dual jobs. However, if tipped workers are expected to spend some of their shift completing work that does not provide tips, they may have a dual job. Take a server for example. The server may spend four hours waiting tables, but then two additional hours cleaning, taking inventory, stocking table condiments, etc. The employer must pay the server the full minimum wage, without taking a tip credit, for those two hours.[3]
Another issue is tip pooling. Although tip pooling has potential benefits for employees, it can also be misused by employers. While many believe that back-of-house staff (line cooks, dishwashers, bussers, etc.) deserve a cut of the tip for their role in the dining experience, this practice cuts wait staff tip wages by more than 50%, which is definitely not in accordance with the law. According to the Federal Department of Labor, only employees who regularly receive tips can be part of the pool and employees must receive notice that they will be pooling. The law says that employees cannot be required to share their tips with employees who do not receive their own tips, like dishwashers or cooks.[4]
Whether or not the minimum wage (and tipped minimum wage!) will change next year as a result of the CPI formula or the presidential election, employers should review their payroll practices to ensure compliance and minimize the chance of wage and hour issues!
[1] http://www.orlandosentinel.com/business/brinkmann-on-business/os-florida-minimum-wage-20151019-post.html
[2] http://hr.blr.com/HR-news/Compensation/FLSA-Fair-Labor-Standards-Act/Florida-court-FLSA-rules-valid-tip-credits-pools/#
[3] http://www.nolo.com/legal-encyclopedia/florida-laws-tipped-employees.html
[4] http://www.danzlaw.net/blog/2016/06/understand-the-tipped-minimum-wage-laws-and-common-florida-violations.shtml
With the passing of longtime anti-feminist Phyllis Schlafly, famous for her long and prominent history opposing women’s rights and equal pay, perhaps now is the perfect time to consider the impact the election could have on equal pay, especially since this election could potentially result in the first female president of the US.
According to 2014 Census data, the most recent available, women earn an average of 79 cents for every dollar a man makes. This disparity is even greater for African American women (60 cents per dollar) and Latinas (54 cents per dollar). While the Obama administration has attempted to push forward legislation to address pay inequality, this issue will most likely fall to our next president.
Traditional political party roles on the idea of equal pay for equal work were *almost* shattered this election season when Ivanka Trump announced that her father Donald Trump, current Republican nominee, “will fight for equal pay for equal work.” While Trump has said that “women who work as hard as men [should] make the same if [they] do as good a job,” this statement does not mean that Trump plans to fight for gender based equal pay. In fact, Trump stands firmly with Republican party leaders, many of whom are dedicated to defeating potential gender equity pay laws.
Working to ensure that employers provide equal pay for equal work has traditionally been a priority for the Democratic Party. Republicans have historically opposed any laws that would infringe on an employer’s ability to reward its workers on the basis of merit with minimal government interference. Those positions have held true so far in the 2016 presidential election season.[1]
Senate to take up and pass the Paycheck Fairness Act, legislation which will help close the wage gap between women and men working equivalent jobs, costing women and their families $434,000 over their careers
Hillary Clinton, who sponsored the Paycheck Fairness Act during her time as a Senator, is still pushing to pass the act, which goes beyond equal pay to cover paid family leave and minimum wage increases among other things. While the Paycheck Fairness Act sounds like a simple and fair fix, opponents say that it could create excessive legislation that would create a burden for small businesses.
Earlier this year the Obama administration proposed executive action through the EEOC to require employers with 100+ workers to provide detailed information about employee earnings. Under the proposed law, employers would need to break down pay information by gender, race and ethnicity so that pay gaps are easily identified. [2] For more than 50 years, employers have reported workforce data by race, ethnicity, sex and job category. This proposal would add summary data reported by pay ranges and hours worked. Under the most recent proposal, the report on 2017 employment information would be due by March 31, 2018.[3]
While no one knows what this requirement might look like after the election, or if it will even exist, legal experts recommend reviewing current pay structures to identify and then address or justify areas of pay disparity.
[1] https://www.shrm.org/hr-today/news/hr-news/pages/clinton-vs-trump-equal-pay-for-equal-work.aspx
[2] https://www.fisherphillips.com/resources-alerts-updated-equal-pay-data-rule-fails-to-address-employer-concerns
[3] https://www.eeoc.gov/eeoc/newsroom/release/7-13-16.cfm
Restaurant operators already have a dizzying amount to manage without getting bogged down by payroll or wage and hour issues. The Fair Labor Standards Act (FLSA) provides state-specific guidelines for things like minimum wage and employee classification that can make even a seasoned HR professional’s head spin. However, considering that failure to comply can result in substantial fines and penalties (and let’s not forget legal fees!), this is one area you can’t afford to neglect.
According to the Restaurant HR Group, one of the most common wage and hour mistakes in the restaurant industry is misclassification of employees. When you hire or contract with a new worker the FLSA requires that the worker be classified as an employee or independent contractor. The mistake most often made is to classify an employee as a contractor when they are not.
The classification process can be confusing and requires employers to determine whether or not an “employer – employee” relationship exists. But how do you know? Thankfully the IRS provides factors to consider when making this determination based on the ideas of control and independence in the relationship.
According to the IRS, factors that provide evidence of the degree of control and independence fall into three categories:
While there may be some indicators that lean toward an employee determination, and others that lean toward a contractor determination, the entire relationship must be considered. One final and often overlooked step in this process is making sure that you document how you arrived at the conclusion.
Another common wage and hour mistake in the restaurant industry happens when classifying employees as either exempt or non-exempt. With new overtime laws effective December 2016, it is important to review current employee classifications to prepare.
According to Eater.com, the average U.S. wage for chefs, head cooks, and pastry chefs is $45,920. For bakers, that number is $26,270. Based on the new Overtime Law, these workers, often salaried and working 50 or more hours per week, will qualify for time-and-a-half pay for their extra hours if employers do not consider options such as adjusting wages or cutting hours.[2]
Based on the new law and the national increase in employee lawsuits related to exempt status, now is the perfect time to review employee classifications. Need some help? Don’t hesitate to reach out- we’re here for you.
[1] https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
[2] http://www.eater.com/2016/5/18/11696664/obama-overtime-labor-laws
Small business owners without any HR expertise and without seeking outside counsel tend to classify their employees on a whim, believing that granting someone “exempt” status will save the business on overtime expenses. Little thought is given to whether their “exempt” employees actually qualify for their exempt status. This is a problem that unfortunately, many of them don’t realize the severity of until there’s a claim of overtime that allows for them to learn about the qualifications for the exemption. By then, its usually too late and they are well on their way to losing a case.
Generally, an employee is paid on a salary basis if s/he has a “guaranteed minimum” amount of money s/he can count on receiving for any work week in which s/he performs “any” work. To qualify as exempt, employees must generally be paid a predetermined amount over $455 per week each pay period not-dependent on the quality or quantity of the work performed. Starting December 1st, 2016, the salary threshold of $455 a week will rise to $913 ($47,476 per year) making an additional 4.2 million workers eligible for overtime pay.
An employee who meets the salary level tests and also the salary basis tests is exempt only if s/he also performs exempt job duties.
There are three typical categories of exempt job duties, called “executive,” “professional,” and “administrative.”
Exempt executive job duties.
Job duties are exempt executive job duties if the employee
“Mere supervision” is not sufficient. In addition, the supervisory employee must have “management” as the “primary duty” of the job.
Business owners should remember to look at the job duties of the position, not the job title of an employee to determine whether an exempt status applies. The Fair Labor Standards Act (FLSA) also provides certain exemptions for outside sales personnel, certain specialized computer personnel, certain highly compensated employees, certain retail sales employees, and employees covered by the Motor Carrier Act (MCA); Qualifying for these and documenting your rationale can get a little technical, and business owners should consult with an HR or Labor Attorney to ensure the exemption will hold up if ever challenged.
With the new salary threshold becoming effective in a few months, the time is perfect for employers to reevaluate their exempt/nonexempt classifications. If you are concerned that some of your exempt workers may be misclassified, the new regulations will give you another reason to revise their classification without necessarily creating liability for past wages.
The way it would work is, the city’s minimum wage would be changed to $10.31 per hour starting in 2018. From then on, there would be an increase of $1 dollar per hour for each year – eventually reaching $13.31 by 2021. Once that happens, the city commission can reconsider each year if they need to increase the minimum wage.
We will keep you informed as to any potential changes in city’s implementation plans as compliance with this new ordinance gets closer.
Source: Miami Beach Approves Raise In Minimum Wage To $13.31 « CBS Miami
The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.
Wondering how these new rules impact your labor force, and what you can do to ensure you remain in compliance? We can help! Complete the form to your right or call and ask for help- one of our HR Consultants will be glad to sit with you and analyze the impact to your impact and recommend solutions for your particular situation. There is no one-size-fits-all solution to complying with this rule, as what is best for every business can vary depending on many factors.
Source:
5 million additional Americans are expected to qualify for overtime pay under the new rule.
Millions of additional Americans are expected to become eligible for overtime pay under a new rule expected to be released by the Labor Department as early as this week.
The Obama administration, and worker advocates, have portrayed the change as a linchpin of its efforts to raise U.S. wages that have stagnated for years. Businesses, however, say the measure will saddle them with red tape and force many to effectively demote managers or find ways around the regulation.
Currently, management, administrative and professional employees earning more than $26,660 a year are exempt from receiving overtime pay when they put in more than 40 hours a week. The rule proposed by Labor last summer would raise that threshold to $50,440. However, law firms and worker advocacy groups say the final version lowers the proposed threshold slightly to $47,000.
Research conducted by online employment website Glassdoor has found that consulting and technology companies offer their employees some of the highest salaries in America. Chicago-based consulting firm A.T. Kearney was ranked first overall for pay with median total compensation amounting to $167,534. Strategy& came second with $160,000 while Juniper Networks rounded off the top three with $157,000.
You will find more statistics at Statista
Uber has agreed to pay millions of dollars to settle two class-action lawsuits that would have defined the relationship between the company and its drivers.
Uber has survived a major threat to its business model, settling two legal suits brought by drivers who sought to be classified as employees instead of independent contractors.
The ride-hailing firm will pay up to $100 million to the 385,000 drivers, but their employment status will not change.
The class actions were brought in California and Massachusetts. Uber, which is valued at up to $70 billion, is on the hook for a $84 million initial payment, and another $16 million if it goes public.
Source: Uber will pay up to $100 million to settle labor suits
The 529 plan is coming to the workplace.
To make it easier for employees to save money for college, more companies are adding 529-plan perks to workplace-benefits packages. Some employers allow workers to fund these college-savings vehicles automatically via payroll. Others kick in matching contributions. The goal is to make saving for college akin to saving for retirement by providing some of the same incentives that encourage workers to contribute to 401(k) accounts.
“We have absolutely seen an uptick in both interest and numbers of employers offering college-savings plans in the workplace, says Kris Spazafumo, a vice president at American Funds, whose CollegeAmerica 529 plan is the country’s largest by assets under management, according to Morningstar.
It’s almost impossible to watch the news or follow social media without hearing at least one side of the debate for raising wages. Last year The Wall Street Journal and Vistage International conducted a survey of 728 small business owners across the U.S., from a range of industries, and found that small business owners were evenly split in their opinion of raising the minimum wage, with about 49% of respondents saying the federal minimum wage should be raised, while 49% disagreed.
While reasonable arguments can be found on both sides of the fence, one thing that is certain is that businesses must revisit the issue of wages in their overall workforce strategy. In our last post, we mentioned that our employees can’t help comparing what they’re making to what their peers are making, both inside the organization and out. Last week, Costco announced that it will be raising wages for both new and current entry-level workers in the U.S. This means that Costco will be paying workers at least $13 an hour. Even those who don’t work in retail will be comparing their pay to that of Costco. Analysts suggest that, as the economy adds jobs, retailers will have to start paying their front-line employees more if they want to retain them.
Couple the Costco wage increase news with the increase Walmart announced a few months back, and it is easy to predict that the U.S. labor market might be tightening. February’s Department of Labor monthly report showed strong hiring in the U.S. economy as evidenced by the addition of 242,000 jobs and a steady unemployment rate of 4.9%. The U.S. economy has been adding jobs 72 months in a row. As the economy improves and job openings become more plentiful, it is safe to assume that workers will have more opportunities to jump from job to job in search of the best wages.
According to The Atlantic, many businesses are reporting that the competition for low-wage workers is growing and it’s harder to find employees to fill vacant positions. The Wall Street Journal reports that one third of small firms stated that they had lost workers due to higher wage offers by competitors or other businesses.
Of course, it’s not always feasible to adjust wage scales. If this is the case, then it’s time to revisit other ways to keep your employees motivated, productive and loyal. In terms of keeping your employees happy, money isn’t everything. But it helps.
Do you think wage increases outside of your industry will have any impact on your workforce? Weigh in by commenting below.
Choosing how much to pay your employees can be difficult. Are you paying too much? Too little? How much is enough to keep your best and brightest employed within your organization? Being fair to all employees while also showing that they’re valued takes more than a standard pay scale. While the ability to hire a great candidate is often reliant on salary, retaining a great employee may require a little more than just dollars and cents.
Fairness in compensation within your organization, otherwise known as internal equity, is somewhat of a preoccupation in today’s workplace. Our employees can’t help comparing what they’re making to what their peers are making, both inside the organization and out. While we try to keep salary information confidential, the information is easily obtained, sometimes by word of mouth and by information found online. Creating internal equity can help create and maintain the loyalty of your employees.
Looking at the balance between internal and external salary equity is a great place to start. However, no matter how complex and complete your compensation formulas are in reality (assuming all related laws are considered), it is how they are perceived that can truly impact employee loyalty and happiness. If employees perceive that they are not being paid fairly in comparison to their coworkers, they may not feel valued and may leave. If the employee perceives that they do more work than their peers but are paid the same, this may create a similar outcome.
Wages should not be based on job title alone. The tasks completed are more important than the titles. Similar tasks should earn similar wages. Of course, beyond job tasks it is certainly acceptable to consider an employee’s education and prior experience.
More and more employers are creating compensation plans built on the idea of transparency, which helps them to explain why compensation decisions were made. Explaining the factors that led to a compensation decision will allow employees to understand your exact reasoning, which can result in the perception of being paid fairly. The employee’s perception of being paid a fair wage is just as important as the wage itself.
If you haven’t reviewed your pay or internal equity structure recently, now is the time. Your best employees are probably already aware of how much their peers are making and how much they could be making elsewhere.