2016 wage and hour update new overtime rule
TRANSCRIPT
Wage & Hour UpdateNew Overtime Rule
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Agenda Introduction
New Overtime Regulation
FLSA Compliance
Employer & Employee Impact
FLSA Action Plan
Employee Communications
Sage Solutions
Q & A
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New Overtime Regulation
Effective December 1, 2016 Boost to employee income Workers Fairly Compensated for
hard work Estimated Annualized Direct
Employer Impact $239.6M - $255.3M per year
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Overtime Regulation - Now & ThenCurrent regulations
(2004 until effective date of Final Rule, 2016) Final Rule
Salary Level $455 weekly $913 weekly40th percentile of full-time salaried workers in the lowest-wage Census region (currently the South)
HCE Total Annual Compensation Level
$100,000 annually $134,00490th percentile of full-time salaried workers nationally
Automatic Adjusting None Every 3 years, maintaining the standard salary level at the 40th percentile of full-time salaried workers in the lowest-wage Census region, and the HCE total annual compensation level at the 90th percentile of full-time salaried workers nationally.
First Update Jan 1, 2020 - Rise to more than $51,000
Bonuses No provision to count nondiscretionary bonuses and commissions toward the standard salary level
Up to 10% of standard salary level can come from non-discretionary bonuses, incentive payments, and commissions, paid at least quarterly.
Standard Duties Test Wage & Hour Fact Sheet #17A for a description of EAP duties.
No changes to the standard duties test.
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Fair Labor Standards Act Establishes Minimum Wage, Overtime Pay, Recordkeeping, and Youth
Employment Standards Affecting Employees in the Private Sector and in Federal, State, and Local Governments
Employers with Annual Gross Sales Volume of $500K+, Health Care Facilities, Schools and Public Agencies – both State & Local Government
No Exemption for Small Businesses or Non-Profit Organizations
Non-Exempt Workers Entitled to Minimum Wage no less than $7.25/hr
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Overtime Receive Pay for Hours Worked in Excess of 40 hours in a Workweek at a Rate
Not Less than One and One-Half their Regular Rate of Pay
Workweek - 7 Consecutive 24-hr Periods
Bi-weekly Payroll Example – 80 Hours Total
Week 1 – 35 hrs Week 2 - 45 hours
5 OT hours for Week 2
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Nondiscretionary Bonuses & Incentive Payments
Salary Basis Test Fixed rate of pay for fixed number of hours each week Includes Commissions Satisfy up to 10% of New Standard Salary Threshold
• Maximum $4,747.60 can be applied• Made on Quarterly or More Frequent Basis
Nondiscretionary Bonus Awarded if Employee Meets Performance/Productivity Goals Set by
Employer Commissions or Bonuses Might not be Earned from Period to Period
Not Enough Commission or Bonuses in any Given Quarter Entitled to Overtime Pay for any Overtime Hours worked during the
Quarter One catch-up payment at end of quarter
Rewards & Incentives
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Exempt vs. Non-Exempt Salary Exempt Employee
Receives minimum weekly wage Exempt from FLSA OT Regulations based on job duties
and responsibilities• White Collar Exemptions: Administrative,
Executive, Professional, some Outside Sales or IT No requirement to track hours
Salary Non-Exempt Employee Salary rate for fixed number of hours Eligible for OT after 40hrs per week at rate of 1.5
times the hourly rate Morale booster – sense of status & autonomy
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Duties Test Administrative Employees
General Business Operation Independent Judgement
Executive Employees Department Manager Ability to Hire/Fire Employees, Change Status, Advancement/Promotion
Professional Employees Advance knowledge in a field of science or learning obtained by specialized instruction Work that is original and creative in a recognized field of artistic endeavor Teaching in a school system or educational institution IT Staff Performs work that requires the consistent exercise of discretion
Outside Sales Employees Sales of tangible or intangible items, Obtains orders or contracts for services
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Other Overtime Considerations Federal, State & Local Laws
Follow the law that is more generous to the employee
Compensatory Time
Illegal to give Non-Exempt employees comp time instead of paying them overtime
Child Labor
Federal and state laws include special provisions to protect workers younger than 18. These laws can affect the type of work, wages, and hours that an employee can work
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Budget Impact Compression Issue
Salary Realignment to Maintain Valuations in Salary Structure
Limit Future Salary Increases Increased Costs – FICA Taxes, Social Security &
Medicare Payroll Taxes, Benefits Cost
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Benefit Impact Benefit Contributions – Medical, Dental Qualified Retirement Plans STD & LTD Benefits PTO allowances Flexible Work & Tele-Commuting
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FLSA Action Plan Review Employee Classifications
Evaluate employee salaries Review Compa-ratios within each salary
grades by employee’s time in position Manage & Monitor Employee Hours
Time & Labor Management System Various Pay Option Comparison Impact on Internal Pay Equity Cost Controls
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Compensable Worktime Policies Waiting Time On-Call Time Rest & Meal Periods Sleeping Time Meeting & Training Travel Time Use of electronic devices for work-
related purposes outside of regular work hours
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Employee Communications
Communicate prior to the Dec 1st Deadline
Review Updated Policies
Time Management
Increased Efficiencies
Accessibility
Maintain Morale
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Sage Solutions Sage HRMS Sage HRMS Payroll Employee Self Service Sage Benefits Enrollment Sage Time & Attendance Sage HRMS HR Actions Sage HRMS Alerts & Workflow Sage HRMS Talent Management
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Questions?
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Thank you!
For more information, please contact:
Dawn Royer, Senior HRIS ConsultantDirect: 860-269-0507Email: [email protected]
Cost Management Services, LLC.321 Main Street, Farmington, CT 06032Phone: 1-800-517-9099www.cmshris.com
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