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By Nicole Federico, eTekhnos Benefits Technology

0818On December 1, 2016, the Department of Labor (DOL) will implement changes raising the minimum compensation for exempt employees to $47,476 annually. While salary is just half of a two-part equation that includes a duties test of essential job functions, scrutiny is under way to analyze compensation and find solutions to avoid conflict with the new rule. Many employers are asking: Why not just have all employees work 40 hours and get approval for overtime?

The statutory definition of “employ” is “to suffer or permit to work.” The phrase “suffer or permit” to work does not mean “approve.” Hence, any time a nonexempt employee works, the employee must be compensated. A nonexempt employee cannot volunteer to work off the clock, so activities as innocuous as an employee arriving early and just starting their day become problematic. Common advice is to issue progressive discipline for employees who work unapproved overtime, but writing up a good employee for what they reasonably perceive to be initiative can open a new can of worms.

Employers further bear the burden of capturing and recording all time worked. Documenting compensable time is complicated when reviewing the variations of what constitutes work time. The non-exhaustive list includes:

  • Waiting or on-call time when it is on the employer’s premises (for example, waiting for a shift replacement to arrive)
  • Work-related training activities (including travel time if they are off-site
  • Eating meals while checking emails or answering phones
  • Work travel outside of the employee’s normal commute
  • Answering work emails or completing reports after work hours
  • Attendance at required company functions, including volunteer activities and social events

Even with a sophisticated time-keeping system, capturing all hours is a challenge. So what are some solutions? View the latest UBA Compliance Advisor, “Salary Considerations under the New DOL Standards,” which reviews workable solutions using salary increases, bonuses or incentives—as well as important considerations when paying nonexempt staff on a salary basis.

Originally published by United Benefit Advisors – Read More

(Not So) Dog Days: Getting the Most from Summer Interns | Ohio Employee Benefits

Categories: Employee Pay, HR, Industry News, Team K Blog
Comments Off on (Not So) Dog Days: Getting the Most from Summer Interns | Ohio Employee Benefits

Business guyThousands of high school and college students are getting ready to participate in the time-honored tradition of summer internships and co-ops.

According to the 2015 National Association of Colleges and Employers (NACE) survey, about 51.7 percent of interns and 37.8 percent of co-op participants got hired after their programs ended, which means that most internships lead to viable career opportunities for interns and vital additions to the workforce for employers—almost immediately.

So, how does a company get the most from an internship program and ensure the experience is a win-win for both the employer and the intern?

Compensation

The best advice is that if there is any doubt, pay the intern. But if you are struggling to decide whether or not to pay your interns, review the following Fair Labor Standards Act (FLSA) requirements to determine whether the training you provide during the internship meets the “learner/trainee” rules for an unpaid internship:

  • The training must be comparable to that given at a vocational school. (For example, the intern could pay to receive the training somewhere else).
  • The training must benefit the student.
  • The student would not replace a regular employee. (The intern cannot fill in for someone on a short-term disability or out for the day.)
  • The employer does not immediately benefit from the student’s activities. (This requirement is especially troublesome for employers because the company does expect to receive a benefit from the intern’s labors. Practically, this means the intern cannot deliver mail, sort files, file papers, organize a person’s calendar, conduct market research, write reports, schedule interviews or any other job that assists the employer in any way in running their business).
  • There is no promise of a job following the training.
  • Both the employer and the student understand that no wages will be given for the training period.

Review the Department of Labor fact sheet regarding student interns for more detailed information. In addition to the federal rules, states may have additional conditions that employers must satisfy. Failure to offer training meeting these mandates for unpaid status could lead to employer penalties, including back wages and possible overtime pay to both present and former interns.

If you decide to pay interns, you probably want to know how much to pay them.

Another 2015 NACE survey found that companies expect to pay bachelor’s degree-level interns an average of $17.20 per hour, up from the 2014 average of $16.35 per hour. Pay for high school teens is typically minimum wage.

Hiring

Hiring interns can be a great business decision, both for the employer and the student. The NACE survey says, “The primary focus of most employers’ internship and co-op programs is to convert students into full-time, entry-level employees (70.8 percent and 62.6 percent, respectively).”

Because the intern could end up being a full-time employee later, try to hire the intern based on your company values to help you find the right person for the long term. Learn how hiring the wrong person can cost you.

Make sure you develop an intern policy and thoroughly define the internship program, such as compensation, benefits eligibility requirements and the intern’s at-will status. Setting expectations from the beginning will make sure everyone gets off on the right foot.

Management

Once your intern is on board, make sure you follow all child labor laws; visit the Department of Labor Youth Labor site for more information. Check your state labor laws, which may require stricter child labor standards, and check for other requirements, such as whether your state requires work permits or proof-of-age certificates for minors.

To avoid the possibility of FLSA violations, companies should ensure their interns accurately capture time worked and are paid for all of their hours of work.

Your company can be held responsible for the actions of any workers, including paid and unpaid interns, so make sure interns know and follow all company policies.

One thing to remember when working with interns is that they will often need more supervision and guidance than regular employees, so make sure you can invest the time and effort needed. The last thing you want is for an intern to leave feeling unaccomplished and everyone believing it was a waste of time. Reliable supervision is also the key to preventing problems, including injuries, discriminatory actions and performance failings.

Speaking of performance, make sure you build in feedback loops and evaluations throughout the internship so both the supervisor and intern understand what’s working and what’s not.

The keys to getting the most from summer interns are planning ahead with policies and pay, setting expectations for all involved, hiring the right people and making sure you have time to manage them effectively.

Originally published by ThinkHR – Read More

DOL Releases the New FLSA White Collar Overtime Exemption Rules | Ohio Employee Benefits

Categories: Compliance News, DOL, Employee Pay, Team K Blog
Comments Off on DOL Releases the New FLSA White Collar Overtime Exemption Rules | Ohio Employee Benefits

Overtime1-1024x1024On May 18, 2016, the U.S. Department of Labor (DOL) announced the publication of a final rule amending the white collar overtime exemptions to the Fair Labor Standards Act (FLSA). The final rule, which will be published in the Federal Register on May 23, 2016, increases the threshold salary for the exemption to $913 per week ($47,476 per year), the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). The new rule also increases the total annual compensation requirement needed to exempt highly-compensated employees (HCEs) to $134,004 per year and established a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

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 final rule makes no changes to the duties tests for both standard and HCE positions.

When does the final rule take effect?

The final rule will be published in the Federal Register and take effect December 1, 2016. Initial increases to the standard salary level (from $455 to $913 per week) and the HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective then. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

What is the intent of the final rule?

Proponents argue that the overtime regulations haven’t been meaningfully updated in decades. An exemption from overtime eligibility originally meant only to apply to highly-compensated white-collar employees has applied to certain employees earning $455 per week or $23,660 per year since 2004. In addition to the salary threshold, exempt employees must hold a position that passes the “duties tests” within specific exempt classifications defined in the regulations. According to the DOL, 62 percent of full-time salaried workers were eligible for overtime pay in 1975, but today only 8 percent of those same types of workers are overtime pay eligible due to the low salary threshold that has not kept up with inflation and wage growth.

This final rule updates the salary level required for exemption to ensure that the FLSA’s intended overtime protections are fully implemented, and to simplify the identification of overtime-protected employees, thus making executive, administrative and professional exemption tests easier for employers and employees to understand and apply.

What are the basic applications of the FLSA?

Employees classified as nonexempt from the salary and duties tests covered by the FLSA must be paid at least one and one-half times their regular rate of pay for any hours they work beyond 40 in a workweek (or eight hours in a workday in some states). An employer who requires or permits an employee to work overtime is generally required to pay the employee premium pay for such overtime work. The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour at the federal level. Some states have higher minimum wage rate rates.

Generally, employees of enterprises that have an annual gross volume of sales made or business done of $500,000 or more are covered by the FLSA. In addition, employees of certain businesses are covered by the FLSA regardless of the amount of gross volume of sales or business done (enterprise coverage). These businesses include hospitals, businesses providing medical or nursing care for residents, schools (whether operated for profit or not for profit), and public agencies. Even when there is no enterprise coverage, employees are protected by the FLSA if their work regularly involves them in commerce between states (interstate commerce). The FLSA covers individual workers who are engaged in commerce or in the production of goods for commerce.

State and local governments are also subject to the FLSA; domestic service workers (such as housekeepers, full-time babysitters, and cooks) are also normally covered by the law.

What are the white collar exemptions to the FLSA?

The FLSA’s white collar exemptions exclude certain executive, administrative, and professional employees from federal minimum wage and overtime requirements. Certain computer professionals and outside sales employees are also excluded from these requirements. The final rule addresses changes in the salary thresholds for the executive, administrative, and professional employee and HCE categories.

Currently, to qualify for exemption, a white collar employee generally must meet all of the following tests:

  • Salary Basis Test: An employee must be salaried, meaning that he or she is paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
  • Salary Level Test: An employee must be paid at least a specific salary threshold, which is $913 per week (the equivalent of $47,476 annually for a full-year employee).
  • Duties Test: The employee must primarily perform executive, administrative, or professional duties, as provided in the DOL’s regulations.

Certain professionals are not subject to either the salary basis or salary level tests (for example, doctors, teachers, and lawyers). There is no salary level test required to qualify as an exempt outside sales employee. Finally, the current regulations also contain a relaxed duties test for HCEs who receive total annual compensation of $134,004 or more paid on a salary basis.

Keep in mind that job titles do not determine exempt status, and the fact that a white collar employee is paid on a salary basis does not alone provide sufficient grounds to exempt that employee from the FLSA’s minimum wage and overtime requirements. For an exemption to apply, an employee’s specific job duties and salary must meet all of the applicable requirements provided in the DOL’s regulations.

What is a highly-compensated employee (HCE)?

An HCE is paid total annual compensation of $134,004 or more and is deemed exempt under § 13(a)(1) of the FLSA if all of the following apply:

  • The employee earns total annual compensation of $134,004 or more, paid on a salary basis.
  • The employee’s primary duty includes performing office or non-manual work.
  • The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee.

For example, an employee may qualify as an exempt HCE if he or she earns at least $134,004 annually and customarily and regularly directs the work of two or more other employees, even though the employee does not meet all of the other requirements in the standard test for exemption as an executive.

For HCE exemption under the final rule, employees must earn a minimum of $913 per week on a salary or fee basis, while the remainder of the total annual compensation may include commissions, nondiscretionary bonuses, and other nondiscretionary compensation.

How are nondiscretionary bonuses and incentive payments included in the salary test?

For other non-HCE employees, the final rule allows nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary test requirement. This includes nondiscretionary incentive bonuses tied to productivity or profitability, such as profit-sharing, retention or production bonuses, and incentive payments, including commission payments based on pre-set formulas. Under certain conditions, catch-up payments within the quarter may be allowed.

The final rule does NOT allow discretionary bonuses that are awarded irregularly and at the employer’s sole discretion to be included as part of the standard salary test requirement, such as spot awards for performance or special projects.

Is there a small business exemption from the FLSA or the DOL’s overtime rule for white collar workers?

The FLSA does not provide an exemption for small businesses. Generally, the FLSA and the final rule apply to employees of enterprises that have an annual gross volume of sales made or business done of $500,000 or more, and certain other businesses (enterprise coverage). Even when there is no enterprise coverage, employees are protected by the FLSA if their work regularly involves them in commerce between states (interstate commerce). The DOL has published a Small Business Guide that provides additional information to assist small employers in complying with this rule.

When will annual automatic updates to the salary thresholds be made?

The automatic updates to the standard salary and HCE total annual compensation levels will be made every three years by applying the same method used to set those levels in the final rule. The DOL will update the standard salary level to maintain it at the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage Census Region, and will update the HCE total annual compensation level to maintain it at the annual equivalent of the 90th percentile of earnings of full-time salaried workers nationwide. The first update will take effect on January 1, 2020.

Where do I start when the new rule is implemented?

Although these changes do not go into effect until December 1st, start considering your options for compliance now. Options include raising pay to meet the new exemption thresholds, reducing workloads for individual employees who regularly work more than 40 hours per week and whose jobs will be reclassified as overtime eligible to reduce overtime payments, adjusting salary budgets to allow for additional overtime pay, and carefully planning your communications strategy for announcing the changes you will be making.

Begin your analysis by:

  1. Determining exempt positions where employees currently earn less than $47,476.
  2. Identifying your pay strategy and modeling scenarios where you increase the salary of these employees above the new salary level to maintain their positions as exempt, reducing salaries for newly reclassified nonexempt employees, and calculating the additional overtime the newly reclassified nonexempts may be earning.
  3. Analyzing work requirements and duties for employees who are reclassified as nonexempt, establishing overtime restrictions and hourly reporting requirements.
  4. Analyzing your benefits and paid time off structures to determine whether changes need to be made as the employee transitions from exempt to nonexempt status.
  5. Planning your communications strategy so that impacted employees will understand the changes and expectations going forward.

The DOL has prepared additional useful information to assist employers in understanding the impact of the final rule.

Originally published by ThinkHR – Read More

By Linda Rowings

Many employee benefit limits are automatically adjusted each year for inflation (this is often referred to as an “indexed” limit). The Internal Revenue Service and the Social Security Administration have released a number of indexed figures for 2015.

Limits of particular interest to employers include the following.Money

For health and Section 125 plans:

  • The health flexible spending account (HFSA) maximum employee contribution is increasing to $2,550.
  • The maximum out-of-pocket limit that applies to non-grandfathered group health plans that are not coupled with a health savings account (HSA) will be $6,600 per individual and $13,200 per family.
  • The maximum out-of-pocket for a high deductible health plan coupled with an HSA will increase to $6,450 per individual and $12,900 per family.
  • The minimum deductible for a high deductible health plan coupled with a health savings account (HSA) will increase to $1,300 per individual and $2,600 per family.
  • The maximum HSA contribution will increase to $3,350 for individual coverage and $6,650 for family coverage. The catch-up contribution (available to those aged 55 and older) remains at $1,000.

 For qualified plans:

  • The annual deferral for 401(k), 403(b), and most 457(b) plans will increase to $18,000.
  • The catch-up contribution limits (available to those aged 50 and older) will increase to $6,000.
  • The threshold for “highly compensated employees” will increase to $120,000.
  • The threshold for an officer to have “key employee” status remains at $170,000
  • The annual compensation limit will increase to $265,000

 Social Security/Medicare Withholding:

  • The taxable wage base will increase to $118,500
  • The OASDI tax rate remains at 6.2%
  • The Medicare tax rate remains at 1.45%

Read More …

Know the Minimum Wage in Your State? You Might Want to Check Again – Ohio Employee Benefits

Categories: Employee Pay
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2014 was an odd year in regards to minimum wage. Although Congress failed to pass any legislation regarding the federal minimum wage, nearly half the states had minimum wage increases that went into effect on January 1, 2015. In addition, at least 20 states will have minimum wage increases in 2016 (due to scheduled minimum increases or annual minimum wage calculations). Employers, especially those with multi-state operations, should review the minimum wage of the state(s) in which they operate and make preparations for the changes.

Breakdown of Minimum Wage Increases

There are currently 10 states that adjust their minimum wage annually: Arizona, Colorado, Florida, Missouri, Montana, Nevada, New Jersey, Ohio, Oregon, and Washington. Of all of these states, with the exception of Nevada, the new minimum wage rate goes into effect on January 1st of each year. In Nevada, the new minimum wage rate goes into effect on July 1st of each year.

In November 2014, there were four states that passed ballot initiatives increasing the state minimum wage: Alaska, Arkansas, Nebraska, and South Dakota. With the exception of Alaska, the new minimum wage rates in these states went into effect on January 1, 2015. While South Dakota limits their minimum wage increase to 2015, Alaska, Arkansas, and Nebraska have increases in subsequent years.

The minimum wage increases in the remaining jurisdictions were the result of legislation passed in either 2014 or previous legislative sessions. These jurisdictions include: Connecticut, Delaware, the District of Columbia, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, New York, Rhode Island, Vermont, and West Virginia. Many of these states also have scheduled minimum wage increases in years following 2015.

The New Rates

The following is a summary of the minimum wage increases.

Alaska. Alaska’s minimum wage is scheduled to increase as follows:

  • On February 24, 2015, the minimum wage will increase to $8.75 per hour.
  • On January 1, 2016, the minimum wage will increase to $9.75 per hour.

Arizona. Effective January 1, 2015, Arizona’s minimum wage is $8.05 per hour.

Arkansas. Effective January 1, 2015, Arkansas’s minimum wage is $7.50 per hour.  Arkansas’s minimum wage is scheduled to increase as follows:

  • On January 1, 2016, the minimum wage will increase to $8 per hour.
  • On January 1, 2017, the minimum wage will increase to $8.50 per hour.

California. Effective January 1, 2016, California’s minimum wage will increase to $10 per hour.

Colorado. Effective January 1, 2015, Colorado’s minimum wage is $8.23 per hour.

Connecticut. Effective January 1, 2015, Connecticut’s minimum wage is $9.15 per hour. Connecticut’s minimum wage is scheduled to increase as follows:

  • On January 1, 2016, the state minimum rate will increase to $9.60 per hour.
  • On January 1, 2017, the state minimum rate will increase to $10.10 per hour.

Delaware. Effective June 1, 2015, Delaware’s minimum wage will increase from $7.75 to $8.25 per hour.

District of Columbia. The District of Columbia’s minimum wage is scheduled to increase as follows:

  • On July 1, 2015, the minimum wage will increase to $10.50 per hour.
  • On July 1, 2016, the minimum wage will increase to $11.50 per hour.

Florida.  Effective January 1, 2015, Florida’s minimum wage is $8.05 per hour.

Hawaii. Effective January 1, 2015, Hawaii’s minimum wage is $7.75 per hour. Hawaii’s minimum wage is scheduled to increase as follows:

  • On January 1, 2016, the minimum wage will increase to $8.50 per hour.
  • On January 1, 2017, the minimum wage will increase to $9.25 per hour.
  • On January 1, 2018, the minimum wage will increase to $10.10 per hour.

Maryland. Effective January 1, 2015, Maryland’s minimum wage is $8 per hour.  Maryland’s minimum wage is scheduled to increase as follows:

  • On July 1, 2015, the minimum wage will increase to $8.25 per hour.
  • On July 1, 2016, the minimum wage will increase to $8.75 per hour.
  • On July 1, 2017, the minimum wage will increase to $9.25 per hour.
  • On July 1, 2018, the minimum wage will increase to $10.10 per hour.

Massachusetts. Effective January 1, 2015, Massachusetts’ minimum wage is $9 per hour. Massachusetts’ minimum wage is scheduled to increase as follows:

  • On January 1, 2016, the minimum wage will increase to $10 per hour.
  • On January 1, 2017, the minimum wage will increase to $11 per hour.

Michigan. Michigan’s minimum wage is scheduled to increase as follows:

  • On January 1, 2016, the minimum wage will increase to $8.50 per hour.
  • On January 1, 2017, the minimum wage will increase to $8.90 per hour.
  • On January 1, 2018, the minimum wage will increase to $9.25 per hour.

Minnesota. Minnesota’s minimum wage is scheduled to increase as follows:

For large employers (employers that have at least $500,000 in annual gross sales or business done) the minimum wage will increase as follows:

  • On August 1, 2015, the minimum wage will increase to $9 per hour.
  • On August 1, 2016, the minimum wage will increase to $9.50 per hour.

For small employers (employers that have annual gross sales or business done of less than $500,000) the minimum wage will increase as follows:

  • On August 1, 2015, the minimum wage will increase to $7.25 per hour.
  • On August 1, 2016, the minimum wage will increase to $7.75 per hour.

Missouri. Effective January 1, 2015, Missouri’s minimum wage is $7.65 per hour.

Montana. Effective January 1, 2015, Montana’s minimum wage is $8.05 per hour.

Nebraska. Effective January 1, 2015, Nebraska’s minimum wage is $8 per hour. Nebraska’s minimum wage is scheduled to increase to $9 per hour on January 1, 2016.

Nevada. Effective July 1, 2015, Nevada’s minimum wage will increase; however, the state does not announce the new effective minimum wage rate until April 1st of each year.

New Jersey. Effective January 1, 2015, New Jersey’s minimum wage is $8.38 per hour.

New York. Effective January 1, 2015, New York’s minimum wage is $8.75 per hour. New York’s minimum wage is scheduled to increase to $9 per hour on January 1, 2016.

Ohio. Effective January 1, 2015, Ohio’s minimum wage is $8.10 per hour.

Oregon. Effective January 1, 2015, Oregon’s minimum wage is $9.25 per hour.

Rhode Island. Effective January 1, 2015, Rhode Island’s minimum wage is $9 per hour.

South Dakota. Effective January 1, 2015, South Dakota’s minimum wage is $8.50 per hour.

Vermont. Effective January 1, 2015, Vermont’s minimum wage is $9.15 per hour. Vermont’s minimum wage is scheduled to increase as follows:

  • On January 1, 2016, the minimum wage will increase to $9.60 per hour.
  • On January 1, 2017, the minimum wage will increase to $10 per hour.
  • On January 1, 2018, the minimum wage will increase to $10.50 per hour.

Washington. Effective January 1, 2015, Washington’s minimum wage is $9.47 per hour.

West Virginia. Effective January 1, 2015, West Virginia’s minimum wage is $8 per hour. West Virginia’s minimum wage is scheduled to increase to $8.75 per hour on January 1, 2016.

Source: ThinkHR.com