New overtime exemption rules enter final review stage

After months of speculation, the U.S. Department of Labor (DOL) advanced its final draft of new requirements for overtime pay exemption rules to the Office of Management and Budget (OMB) on March 14, 2016.

This step marks the final stage before implementation as OMB completes its review and releases the new regulations. The OMB’s review phase may take up to 90 days, but approval may occur sooner. While it is difficult to pinpoint a timetable, experts are forecasting the release for June or July 2016 and implementation on or about September 2016.

So what should employers do now? First and foremost, begin planning. Taking a wait-and-see approach may be appealing, but there are strategic planning steps which should be taken now:

Step 1: Understand the proposed new rules:

• The standard salary test amount changes. To be exempt from overtime pay, qualifying employees must be paid at least $970 per week ($50,440 annually) under the new rules. The current minimum is $455/week ($23,600 annually).
• A provision would increase the salary test level on an annual basis. This represents an addition to current regulations and adds a formula by which the salary test will be increased each year, indexed to inflation.
• For highly paid employees, the total compensation threshold will increase from $100,000 to $122,128,and these levels would also be increased each year.
• Another change under consideration is the duties test, establishing a minimum amount of time an employee may perform exempt vs. non-exempt tasks and identifying a minimum amount of time for a duty to be considered a primary duty.. Although the proposed rule does not offer specific changes, there has been discussion about making this change in the new rules.

Step 2: Analyze your current positions and exempt classifications to:

• Identify positions and employees who may be reclassified from exempt to non-exempt.
• Evaluate the need and frequency of each position to work more than 40 hours per week.
• Redesign pay structures and determine new pay rates.
• Review other policies (including benefits, bonuses, schedules, overtime approval) and how they will apply to those who will be newly classified as non-exempt.

Step 3: Build a communication and training plan for:

• Newly classified non-exempt staff
• Supervisors and Managers
• Others within the organization

Step 4: Evaluate non-exempt status changes on an ongoing basis for:

• Potential impact on budgets in current and future years
• Potential impact on schedules and workload
• Potential impact on HR policies and practices
• Additional training required

For more, see the U.S. Department of Labor website’s Frequently Asked Questions about the Notice of Proposed Rulemaking for Overtime: http://www.dol.gov/whd/overtime/NPRM2015/faq.htm

 

SusanPrice_6710

Susan Price, Strategic Account Manager

It’s Spring: Time to organize and clean up those employee records

Spring is in the air and there is no better time to get organized. That includes your HR records. It can seem daunting at first but take a deep breath and roll up your sleeves and use a few of these guidelines to will help you get started.

Where should you keep personnel files? If you have a person or department dedicated to Human Resources, keep personnel files in that person’s area or in a designated place within that department. If your organization does not have a designated Human Resources representative, then the manager who supervises the employee should keep the personnel files in a locked cabinet or room.

Who has access to personnel files? Only the Human Resources representative and an employee’s immediate supervisor should have access to personnel files. Grant other access on a case-by-case basis only, and at the discretion of the Human Resources representative or relevant manager. In large companies with many managers who access files, I recommend implementing a check-out system which tracks when a file is reviewed, and by whom. Become familiar with your state’s regulations as to how and when an employee may have access to their own personnel files, as they vary.

What should you keep in a personnel file? Personnel files should include objective information related to hiring, promotion, demotion, compensation, discipline or discharge of an employee. Specific documents that may go in a personnel file include, but are not limited to:
• Application and resume
• Offer letters
• Performance Reviews and disciplinary notices
• Compensation and deduction information
• Confidentiality and/or non-compete agreements
• Acknowledgment of handbooks
• Attendance records, including vacation and personal leaves
• Changes in name, address or telephone numbers
• Beneficiaries on Company provided insurance policies
• Emergency Contact information
• Training records
• Termination/Resignation letters

What should NOT be kept in a personnel file? Documents which should never be placed in a personnel file include, but are not limited to:
• Subjective notes about the employee (during interviews, on applications, etc.)
• Reference checks or letters of reference
• Documents relating to a criminal or other investigation of the employee
• Credit reports
• Immigration and naturalization information (I-9 Forms)
• Medical files or any records informing of a medical condition
• Photos of the employee, including photocopies of drivers licenses

What about I-9 Forms? These immigration forms disclose national origin; therefore, I advise keeping this data separate from personnel files. It is not necessary, however, to keep a separate I-9 file for every employee. Instead, I recommend keeping I-9 information in two binders: one for current employees and one for past employees. The Immigration Reform and Control Act (IRCA) requires employers to retain completed I-9 forms for three years after the date of hire or one year after the date employment ends, whichever is later.

What about medical records? There are many opportunities for employees to provide the organization with documents which include medical information. For instance, an employee may provide medical information relating to disability issues, a workers’ compensation issue, Family Medical Leave Act, or even sick leave. Maintain such records separately from the personnel file, in a locked drawer with very limited access. Similar to my advice regarding personnel files, institute a check-out system to regulate and document who has access to these records.

How long should specific documents be kept?
• Employee Compensation: Payroll records (including records of wages, hours, collective bargaining agreements, employment contracts, date of payment, amount of payment, record of straight and overtime earnings etc.) should be kept for three years. Time cards can be discarded after two years.
• Leave of Absence Records: Family Medical Leave Act records related to leaves of absence should be kept for three years. This includes basic payroll data, FMLA leave dates, and copies of leave notices.
• I-9 Documentation: Employers must retain completed I-9s for three years after the date of hire or one year after the date employment ends, whichever is later.
• Pre-Employment Records (i.e. advertisements, applications, resumes): The Age Discrimination in Employment Act requires you to keep advertisements, job applications, and resumes for one year from the date of the event.
• OSHA Logs: This law mandates that Occupational Safety and Health Administration logs be kept for five years following the end of the year to which the records relate.
• Employment Records (including promotions, demotions, transfers, terminations):

Companies must keep these records for one year from the date the record was made or the termination action was taken, whichever is later.

Now that you have some guidelines to help you get organized, Happy Spring Cleaning!

If you are already a BCN PEO client, BCN securely keeps your employment records for you, and it is not necessary for you to keep records on site. But if you do, these guidelines will help. Contact the experts at BCN Services if we can answer any additional questions about your record-keeping or other HR policies.

 

LisandraQuinones_6713

Lisandra Quinones, Human Resource Administrator