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:

Understand the proposed new rules

  • The standard salary test amount changes. Qualifying employees must be paid at least $970 per week ($50,440 annually) under the new rules to be exempt from overtime pay. The current minimum is $455/week ($23,600 annually)
  • A provision would increase the salary test level on an annual basis. This adds to 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.

Analyze your current positions and exempt classifications

  • 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.

Build a communication and training plan

Focus on:

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

Evaluate non-exempt status changes on an ongoing basis

Look at potential impact on:

  • budgets in current and future year
  • schedules and workload
  • HR policies and practices

Also, consider additional training that might be required.

For more, see the U.S. Department of Labor website.

 

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Susan Price, Strategic Account Manager

Consider impact of daylight-saving time for hourly worker

Many people are familiar with the axiom “spring forward and fall back” to help them remember in which direction to change the clock during daylight-saving time transitions.

However, questions may linger for employers about pay practices for those employees that are “on the clock” during the time change.

Non-exempt employees, who are generally paid on an hourly basis, are entitled to be paid for the hours they actually work. For example, in the fall when employees may only be scheduled for an eight hour shift but end up working nine hours due to the time change, they must be paid for nine hours. In the spring, if a normal work schedule constitutes eight hours, but the employee works only seven hours due to the time change, the employer need only pay seven hours of time worked.

Some companies may decide to pay a full eight hours so that their employees don’t lose regularly expected compensation, but there is no obligation for them to do so.

Employers and scheduling supervisors should not “balance out” time over the year in which an employee works during the time change in the spring and in the fall. Hours should be paid within the time period in which they are worked.

Other questions about compensation or pay practices? Our professional staff at BCN can help. Call us at 800-891-9911 if we can assist you and your business.

 

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Sue Kester, HR Manager

Federal government decreases Standard Mileage Rate for 2016

The federal government has decreased the allowable per-mile reimbursement for employees who drive their vehicles for business and using their vehicles for medical care and moving expenses.

Employers may reimburse their employees for operating an automobile for business, charitable, medical, or moving expense purposes. They can calculate those reimbursements using a variety of methods including: travel days, miles, or the fixed-rate allowance.

Each year the Internal Revenue Service evaluates the Standard Mileage Rate to determine whether the rate is reasonable based on driving costs and whether the rate should be increased, decreased or remain the same. The IRS takes into account costs such as the price of gasoline and oil and other expenses including insurance and repairs.

New published rates include:

  • The standard business mileage rate for auto expenses has decreased to 54 cents per mile for 2016 (from 57.5 cents per mile in 2015).
  • The rate for charitable uses remains the same at 14 cents per mile.
  • The rate for driving for medical care has decreased to 19 cents per mile for 2016 (from 23 cents per mile for 2015).
  • The rate for deductible moving expenses using an automobile has decreased to 19 cents per mile for 2016 (from 23 cents per mile for 2015).

The maximum standard automobile cost under a fixed-and-variable-rate (FAVR) allowance method has decreased from $28,200 for 2015 to $28,000 for 2016 (excluding trucks and vans). The standard cost under a FAVR allowance for trucks or vans has increased from $30,800 for 2015 to $31,000 for 2016.

If the allowance paid to an employee exceeds the amount allowed by the federal government, the excess amount must be reported as wages and is subject to income tax withholding and payment of Social Security, Medicare and federal unemployment taxes.
For more about “Business Use of Car,” visit the IRS website at: https://www.irs.gov/taxtopics/tc510.html or contact the experts at BCN if we can answer your employment questions, including those about employee reimbursement policies and current guidance and legislation.

 

 

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Susanna Achatz, Payroll Manager

Minimum wage laws continue to be a hot employment topic

BCN Services is a full service Human Resources partner, and one of the ways we help keep our clients compliant is to ensure they are updated regarding changes in the minimum wage laws in their state and or localities. The minimum wage and tipped wage requirements are among the main topics of discussion amid the current political and economic news cycle.

BCN has updated all our clients affected by the recent changes in Minimum and Tipped wages throughout the country. We are also supplying updated compliance posters to all our customers affected by the changes.

Inform yourself about minimum wage levels

How much do you know about the minimum wage and tipped wage levels in the U.S.?

The federal minimum wage has not increased since 2009, although many states have adopted new, higher minimum wage standards. The current federal minimum wage is $7.25 per hour and $2.13 per hour for tipped workers.

There are 7 states currently with either no minimum wage or a minimum wage rate listed below the federal rate. In these states, states the federal minimum wage applies. They include:
Alabama, Georgia, Louisiana, Mississippi, South Carolina, Tennessee, and Wyoming.

Twenty three local municipalities have adopted minimum wages above their state minimum wage. They are: Albuquerque, New Mexico; Berkeley, California; Bernalillo County, New Mexico; Birmingham, Alabama; Chicago, Illinois; Emeryville, California; Las Cruces, New Mexico; Louisville, Kentucky; Montgomery County, Maryland; Mountain View, California; Oakland, California; Palo Alto, California; Portland, Maine; Prince George’s County, Maryland; Richmond, California; San Francisco, California; San Jose, California; Santa Clara, California; Santa Fe City, New Mexico; Santa Fe County, New Mexico; SeaTac, Washington; Seattle, Washington; and Sunnyvale, California.

The following states have increased their minimum wage in the past 6 months. The old minimum wage is in parentheses. All wage rates noted are per hour.

Michigan – effective January 1, 2016:

Minimum Wage: $8.50 ($8.15)
Tipped Wage: $3.23

Note: Michigan also has scheduled increases with annual indexing beginning April 1, 2019:
January 1, 2017 – $8.90
January 1, 2018 – $9.25

Other states include:

Alaska – effective Jan., 1 2016
Minimum Wage: $9.75 ($8.75)
Tipped Wage: $9.75

Arkansas – effective Jan. 1, 2016
Minimum Wage: $8 ($7.50)
Tipped Wage: $2.63

California – effective Jan., 1, 2016
Minimum Wage: $10 ($9)
Tipped Wage: $10

Colorado – effective Jan. 1, 2016
Minimum Wage: $8.31 ($8.23)
Tipped Wage: $5.29

Connecticut – effective Jan. 1, 2016
Minimum Wage: $9.60 ($9.15)
Tipped Wage: $6.07

Hawaii – effective Jan. 1, 2016
Minimum Wage: $8.50 ($7.75)
Tipped Wage: $8.50

Massachusetts – effective Jan. 1, 2016
Minimum Wage: $10 ($9)
Tipped Wage: $3.35

Minnesota – effective Aug. 1, 2015
Minimum Wage: $9 ($8)
Tipped Wage: $8

Nebraska – effective Jan. 1, 2016
Minimum Wage: $9 (8)
Tipped Wage: $2.13

New York – effective Dec. 31, 2015
Minimum Wage: $9 ($8.75)
Tipped Wage: $7.50

Rhode Island – effective Jan. 1, 2016
Minimum Wage: $9.60 (9)
Tipped Wage: $3.39

South Dakota – effective Jan. 1, 2016
Minimum Wage: $8.55 ($8.50)
Tipped Wage: $4.28

Vermont – effective Jan. 1, 2016
Minimum Wage: $9.60 ($9.15)
Tipped Wage: $4.80

West Virginia – effective Jan. 1, 2016
Minimum Wage: $8.75 ($8)
Tipped Wage: $2.63

BCN will continue to keep you up to date and in compliance with all federal, state and local laws. By allowing BCN to handle your administrative functions, as well as your Human Resources needs, you can continue to focus on your business’s bottom-line results.

Contact BCN Services today to learn more about our programs.

Direct deposit has many benefits over a traditional, paper paycheck

Employees come to work every day for many reasons, but the one day that all employees look forward to is payday. How employees receive their wages on payday can impact both the employer and the employee.

Although there are other options, the most common methods of payment are either by check or direct deposit.

By encouraging employees to sign up for direct deposit, employers eliminate the risk of lost/stolen checks, altered checks, and checks that are never cashed. Employers that have 100 percent of their employees signed up for direct deposit will increase efficiency throughout the workplace.

Employees that choose to receive a live check are at a disadvantage. Although they may receive their check on payday, they must take time out of their day to obtain their check, take it to the bank and cash or deposit it. Depending upon where the employee banks, there may be a waiting period before the funds are available for use.

On the other hand, direct deposit for employees:

• Allows them to receive their pay sooner. It automatically goes into an employee’s bank account, even if they are on vacation or away from the office
• It saves them from making a trip to the bank and allows easy, faster access through electronic transfer, making things like online banking easier
• Safeguards against forgery and theft which are possible with paper checks
• Allows employees to select more than one account in which to distribute their pay. An employee can put some money into savings and some into a checking account, for example.

If you have questions about direct deposit or other payroll matters, please call BCN Services at 734-994-4100 or toll free at 800-891-9911.

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Susanna Achatz, Payroll Manager

U.S. Supreme Court decision on gay marriage impacts some employer-sponsored benefits

On June 26, 2015, the U.S. Supreme Court of the United States ruled that the 14th Amendment to the United States Constitution compels all states to issue marriage licenses to two people of the same gender and recognize legal marriages between two people of the same gender.

The Obergefell v. Hodges decision was sweeping, all but ending a decades-long battle to bring marriage equality to gay couples. Thirty seven states and the District of Columbia already recognized same-gender marriages before the ruling. Michigan was among 13 states that banned gay marriage through a state constitutional amendment defining marriage to be between one man and one woman.

With this historic decision, all U.S. states and territories can no longer ban same-gender marriage either by state constitutional amendment or popular ballot vote.

Although the decision comes from the highest court of the United States, there are many unanswered questions. The decision did not address matters of discrimination based on religious beliefs, nor did it lay out a step-by-step plan for employers and health insurers to handle the new legislation. This blog specifically focuses on the impact the SCOTUS decision has on employer-sponsored benefits.

Fully insured health plans are now legally bound to recognize same-gender marriages exactly as they would marriages of opposite genders. Although 2013’s United States v. Windsor SCOTUS ruling extended favorable tax treatment on premium dollars paid by employees towards same-gender spouses and dependents coverage, that ruling did not extend those benefits nationwide. The favorable tax treatment of premium dollars now applies to same-gender married couples in every U.S. state and territory.

Small-group employers have always had the option of excluding spousal coverage under their benefit plans. Now, however, the exclusion must be uniform and not directed at same-gender marriages. If an employer disqualifies spousal coverage or requires spouses to take insurance through their own employer prior to enrolling in the company’s plan, the condition must be applied to both same-gender and opposite-gender spouses.

Employers with self-funded medical plans are not forced by the Obergefell ruling to allow same-gender spouses to enroll in their group health plan. It is advised that employers with self-funded plans consider the potential for litigation if they choose, at this point, not to allow same-gender spouses to enroll in their group health plans.

There are still several roadblocks and gray areas due to this ruling: How do groups handle their plan if they already allowed “domestic partners” to enroll? Is there a time limit that vendors will allow domestic partners to become legally married before they disallow coverage? If employers choose to continue allowing domestic partner coverage for same-gender couples, they should be sure to open it to opposite-gender domestic partners, if they did not before.

As always, BCN Services will guide clients and employees through these complexities as they occur. Please encourage your employees to call us with any questions they may have. Timeliness can play a factor, depending on the specific situation

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Frank Lewandowski, Partnership Manager

Be prepared for new federal rules governing overtime exemption

The U.S. Department of Labor has finalized its recommendations for revisions to the laws governing employees considered exempt from overtime.

These recommendations have been submitted to the Office of Management and Budget and are expected to be substantial changes to the current law. The goal of the recommendations is to significantly increase the number of employees eligible for overtime.

Currently, employees are considered exempt from overtime under these situations:

  • Employees must be paid a salary of at least $455 per week to qualify as exempt form overtime (time and one-half for any hours worked over 40 in a pay week).
  • Job duties must include factors such as:
    • The employee must have significant influence in decisions of hiring or firing.
    • The manager should have significant authority to make decisions on matters that affect the operations of the business.
    • A significant portion of the manager’s time must be spent “managing” the business. Management responsibilities should not be incidental to the employee’s work.

The proposed rules are expected to increase the minimum salary to as much as $900 per week or more. This is a significant increase that could affect the bottom line for many companies.

Additionally, the factors the DOL uses when determining if an employee is exempt (called the duties test,) are expected to change as well. The new duties test is expected to include hard-and-fast rules requiring exempt employees to spend at least 50 percent of their time executing management or administrative duties.

Time spent in “exempt” functions is not the only consideration when determining exempt status. Other considerations include:

  • The relative importance of the executive duties as compared with other types of duties
  • His or her relative freedom from supervision
  • The fact that his or her salary is greater than the wages paid to other employees for the type of nonexempt work performed by the executive/manager

Expect to see significant publicity once the final rules are announced. They could potentially affect millions of employees. The DOL has begun using its website to publicize new rules and laws, even creating downloadable phone apps to assist employees in calculating their overtime. The new requirements will likely be front page news on websites, social media sites and television news. Employees will become aware of the changes quickly.

With significant changes to the rules for overtime exemption, it is imperative that employers conduct an audit of their current exempt employees, correct any misclassifications, pay for any unpaid overtime and be prepared to make necessary changes to remain in compliance of the new rules.

As always, BCN stands ready to assist you in evaluating your exempt employee’s status. Please contact your Partnership Manager to assist in a review of your current employees’ status and to prepare to make changes as required by any new rules or laws.

 

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Jeff Walsh, Partnership Manager

Minimum wage increases in Michigan take effect starting Sept. 1

As you may be following in the news, Michigan’s minimum hourly wage has been approved to increase to $9.25 per hour by 2018.

This will be accomplished through a series of incremental bumps with the first one happening Sept. 1, 2014.  During August, be sure to watch your payroll packets for a copy of the updated compliance posters that must be posted in your workplace.

In addition to this first bump, the next increase will occur on Jan. 1, 2016 to $8.50 per hour.  From there it will move up to $8.90 on Jan. 1, 2017 and to $9.25 on Jan. 1, 2018.  In legislating these increases, lawmakers determined that a gradual increase would be better for employers who might need time to adjust to paying employees more.

The law also increases the hourly minimum for employees who receive tips from $2.65 per hour to $3.52 per hour.  Employers with these employees need to be aware – as always – that if the combined hourly total of tips received and wages does not meet the state minimum wage, that it is incumbent upon the employer to make up the wage difference.

  • Below is a link to the new Michigan Minimum Wage and Overtime poster if you are looking for a sneak preview, and as always, please contact your Partnership Manager at BCN Services with any questions or concerns regarding your individual employment strategy:Email: hr@www.bcnservices.com
  • Phone: 734-994-4100 or 800-891-9911
  • Contact us here

Minimum wage and Overtime Poster

 

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Sue Kester, HR Manager

Though employees generally don’t understand labor law, many assume that they do

Frequently we hear employees claim that the “Labor Board” requires the employer to pay for lunches, provide paid vacations, sick days or other benefits. They also may claim that you cannot require them to work overtime hours.

Federal requirements for employers are regulated by the Fair Labor Standards Act (FLSA). These federal requirements are actually quite limited. As an employer, the FLSA requires employers to pay their employees minimum wage and overtime at the rate of time and a half the employee’s regular rate of pay.

Under federal law employers are NOT required to provide:

  • Vacations
  • Holidays
  • Sick Pay
  • Premium pay for weekend, holiday or shift work (beyond the required time and one-half for hours worked over 40 in one week)
  • Pay raises (unless to comply with minimum wage requirements under the law)
  • Other fringe benefits, except as required under the Affordable Care Act
  • Discharge notices, reason for discharge or immediate payment of wages upon termination.
  • Lunches (paid or unpaid)
  • Breaks  (however, if you provide breaks of 20 minutes or less that time is compensable)

Additionally the FLSA does not limit the number of hours you can schedule or require an employee to work (either daily or weekly, including overtime) as long as you pay time and one-half for time worked in excess of 40 hours. Note: this only applies to employees 16 years of age or older.

Some cities and states are more restrictive

That said, many states, and some cities have passed or are considering legislation that will add requirements for employers. For example, many states and cities have higher minimum wage rates than the federal government.

Most states have youth labor laws that limit the number of hours that minors may work. Some states require payment of final wages immediately upon termination. A few states require paid breaks and/or lunches and some states require overtime (time and one-half) for hours worked in excess of 8 hours per day rather than 40 hours per week.

Several cities and a few states have passed paid sick leave requirements.

Additionally, for those working under federal contracts, an Executive Order from the President has raised minimum wage for employees covered under those contracts. In cases where there is a difference between federal and state laws, the law that benefits the employee will always take precedence.

There continue to be changes that may impact employers on national and state and local levels. BCN Services monitors the ever-changing scope of legal requirements for our clients and will keep you apprised of anything that impacts your business.

If you have specific questions regarding employer’s requirements under federal, state or local government regulations, please contact your Partnership Manager. If you are an employer that does not currently work with us, please contact us for assistance or more information.

 

 

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Jeff Walsh, Partnership Manager

Pay overnight employees correctly during daylight-saving time change

Daylight-saving time often creates confusion on how to pay employees that work the overnight period when daylight time begins or ends. The old tip for “Spring Forward, lose an hour on the overnight shift” or “Fall Back, add an hour to the overnight shift” is often helpful.

Most states participate in daylight-savings time. Those employees working the overnight shift when daylight-Saving time begins each spring work one hour less because the clocks are set ahead one hour. Those employees working the graveyard shift when daylight-saving time ends in the fall work an extra hour because the clocks are set back one hour at 2 a.m.

For example:

A scheduled shift starts at 11 p.m. and ends at 7:30 a.m. the next day; your employee works an eight- hour shift and receives a 30-minute lunch break.

  • On the Sunday that daylight-saving time ends (Nov. 3, 2013) at 2 a.m., the employee works the hour from 1-2 a.m. twice because at 2 a.m. all of the clocks are turned back one hour to 1a.m. Thus, on this day the employee worked 9 hours, even though the schedule only reflected 8 hours.
  • On the Sunday that Daylight Savings Time starts at 2 a.m., the employee does not work the hour from 2-3 a.m. because at 2 a.m. all of the clocks are turned forward to 3 a.m. Thus on this day, the employee only worked 7 hours, even though the schedule was for 8 hours.

The Fair Labor Standards Act requires that employees be credited with all of the hours actually worked. Therefore, if the employee is in a work situation similar to that described above, he or she worked (nine) 9 hours on the day that daylight-saving time ends and seven (7) hours on the day that daylight-saving time begins. This assumes, of course, that the employee actually worked the scheduled shift as in our example.

One interesting side note to daylight-saving time: A study by Michigan State University industrial and organizational psychology doctoral candidates Christopher Barnes and David Wagner, reported by various sources, says that workplace accidents spike 5.7 percent on the Monday after we set our clocks forward 1 hour in the spring compared with other Mondays throughout the year. They also reported that a University of British Columbia study found an 8 percent increase in accidents on the changeover day.

The reason? It’s lack of sleep. Although the researchers say that workers actually lose only 40 minutes of sleep on that night, even that small amount of time is significant, Barnes explained.

Barnes said that studies have shown that lost sleep causes attention levels to drop off, and that the impact could be greatest in jobs requiring a high level of attention to detail. So while reportable physical accidents increase, Barnes maintains that it is not unreasonable to think that non-reportable workplace mistakes , such as transposing figures, probably rise as well.

No such spike occurs in the fall when clocks are set back! That’s because workers are getting extra time to sleep.

The study used data from the “American Time Use Survey” conducted by the U.S. Bureau of Labor Statistics and from the U.S. Dept. of Labor Mine Safety and Health Administration. The study was sponsored by the Society for Industrial and Organizational Psychology, whose members study and apply scientific principles to workplace issues.

The researchers also reported that their findings show that not only do the number of accidents increase, but their severity as well.

So if the studies prove to be true, businesses should see a benefit the week of Nov. 3, 2013 with employees experiencing increased work performance because of an extra hour of sleep!

Can we help you with questions about matters of employee pay and other benefits?  Contact BCN Services at 1-800-891-9911 or email hr@www.bcnservices.com.

 

 

Jeff Walsh (200x190)

Jeff Walsh, Partnership Manager