Review pay practices to avoid missteps and be compliant

Although the final federal overtime rule was halted from taking effect on Dec. 1, 2016 this might still be a good time for employers to take action.  The Fair Labor Standards Act (FLSA) changes were designed to address salaried employees’ pay threshold and overtime.  Although the future of the overtime rule is uncertain, employers may still want to review their pay practices, particularly in the areas listed below.

Hourly employees

Travel time – Hourly employees that spend time traveling for work (other than normal home-to-work travel) must be compensated for these hours as regular hours worked and should be counted as such when determining overtime.  Travel to a distant location and/or overnight travel becomes more complicated and a policy should be in place to address this.

Breaks – Company provided breaks for employees are not required by law (there are exceptions in some states for minor employees).  If provided, breaks of 5 to 20 minutes are considered compensable, and an employee’s pay should not be reduced.  Bona fide meal periods (typically lasting at least 30 minutes), serve a different purpose than coffee or snack breaks and, thus, are not work time and are not compensable.

Salaried employees

Misclassification –  To qualify for overtime exemption, employees must meet certain tests regarding their job duties and be paid a salary basis of not less than $455 per week (at the current time.)  Job titles do not determine exempt status.  For an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department of Labor’s regulations.  Many employers run into trouble when the job duties test is applied.  Details of these exemption tests can be found here: http://www.flsa.com/coverage.html.

Docking – There are very limited situations in which a salaried employee’s pay may be docked or reduced.  Pay may not be docked or reduced for a partial-day absence.  Additionally, full-day absences of one or more days must be paid unless the absence is for personal reasons other than illness or disability.

Neither an hourly or salaried employee’s pay can be reduced for company property damage or loss unless the employee has authorized such a deduction in writing.

 

Common pay practice missteps are often made in these areas.  There are many non-compliant practices that are widely followed, particularly some that appear to be industry specific.  However, this rationale will not protect an employer from being responsible for back pay and penalties when a wage-and-hour claim is filed or a Department of Labor investigator shows up at the door.

Concerns?  The professional staff at BCN can review your current practices, make recommendations, and help you to plan and communicate any changes in pay practices to employees.

 

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Sue Kester, HR Manager

 

From CARBON PAPER to NET PROMOTOR SCORES…The continued evolution of business

Like my own dad did for me, I often try to share some historical perspective with my children when it comes to why things are the way they are, or where they come from.

So when I asked my daughter this week to “CC me on an email”, I quickly added “You know, CC is short for Carbon Copy…you know, when you used to type a letter, to keep a copy you would put a sheet of carbon between…”  Before I could finish the sentence, I heard: “I know, Dad, we do that in Lab at school!  I really like that copy!”

As the old saying goes, some things never change.

But mostly they do.  What’s great about history is being able to put it in perspective, and learn and grow from it.   In the next 24 months, our company will celebrate looking back while forging aggressively into the future.  The year 2017 marks the celebration of 25 years of operation for BCN Services, our flagship Professional Employer Organization.  I am proud of our growth. We started in one small office in the corner of our building taking over the entire space within 7 years and expanding our service to clients with worksite employees in 47 states in 2015.

Our next milestone, one that I am equally proud of, is the recognition of 90 years for the BCN brand here in Ann Arbor, Michigan.  The Bradley, Chesbrough, Niswonger Agency began serving the business community as a commercial insurance agency in 1928, and it was no mistake that BCN was part of our name when we expanded into employment outsourcing arena in 1992.  We are proud to be associated with the BCN name and work every day to live up to its stellar reputation.

It is our clients that deserve the recognition for our success.  They have helped us create our Commitment to Quality Service approach, originally developed in 1996, so BCN staff can deliver consistent, professional, and timely service. It is a Service Protocol we modernized to a Net Promotor Score (NPS) system in 2016 using our Customer Relationship Management (CRM) system.   We are pleased to have received an average NPS Score of 91.1 from our clients in December.  Thank you for your feedback!

We look forward to celebrating these anniversaries through our clients’ continued successes, and plan to share some of the history that shapes our future in the months ahead.

We appreciate your business! Please contact us if you have questions about any of your human resources policies or needs.

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Andy Hans, President/CEO

State tax reciprocity: What it is and how it can affect your employees

If you have hired, or are thinking of hiring, employees who live in a state different than your worksite,you should be aware of the tax implications.

Many states have entered into tax reciprocity agreements with surrounding states, allowing employees to pay state tax for only the state that they live and not for the state in which they work.  For example, Michigan and Indiana have a reciprocal agreement so if your worksite is in Michigan and you hire an employee living in  Indiana, the new employee would pay only Indiana income tax.

If there is no reciprocal agreement between states, an employee would pay taxes for both the state they live and the one they work in.  For example, the state of New York has no state tax reciprocity, so an employee working in New York state and living in nearby New Jersey is responsible for paying taxes in both states.  We always encourage employees in this situation to consult a tax professional, as there are still many states without tax reciprocity agreements that offer tax credits with the employee’s year-end tax filing.

Being aware of current reciprocity agreements as well as future changes is incredibly important as an employer.  Employees with taxes incorrectly deducted can be charged not only the taxes owed, but for fees and penalties as well.  This can lead an employee to have a negative experience within your company.  Conversely, having the knowledge base of state tax reciprocity can not only help in producing an accurate payroll, but also helps you to answer employee questions confidently and hire new employees with ease.

For easy reference, here is a chart with information sourced from the American Payroll Association detailing current state reciprocity agreements. If you would like more information or have any questions, give BCN Services a call at 1-800-891-9911.

 

State Reciprocity Grid (Updated November 16, 2016)
Worked-In State Reciprocal Lived in States
District of Columbia Any Other US state
Illinois Iowa, Kentucky, Michigan, Wisconsin
Indiana Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin
Iowa Illinois
Kentucky Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, Wisconsin
Maryland District of Columbia, Pennsylvania, Virginia, West Virginia
Michigan Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin
Minnesota Michigan, North Dakota
Montana North Dakota
New Jersey Pennsylvania
North Dakota Minnesota, Montana
Ohio Indiana, Kentucky, Michigan, Pennsylvania, West Virginia
Pennsylvania Indiana, Maryland, New Jersey, Ohio, Virginia, West Virginia
Virginia District of Columbia, Kentucky, Maryland, Pennsylvania, West Virginia
West Virginia Kentucky, Maryland, Ohio, Pennsylvania, Virginia
Wisconsin Illinois, Kentucky, Michigan

 

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Dani Austin, Payroll Supervisor