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January 12, 2015

The New FLSA Rule is Coming. Are you Ready?

Filed under: FLSA,General HR Buzz,Salaries & Pay3:22 am

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By Joyce Marsh, SPHR, Senior HR Consultant

According to the U.S. Department of Labor’s (DOL) Wage and Hour Division, the Fair Labor Standards Act (FLSA) proposed rule should hit somewhere in the first quarter of 2015. This release is somewhat later than the original forecast of November 2014 for the final rule.

The final rule shouldn’t differ too much from the proposed one, so now is the time to start looking at classifications. While no one knows for sure what the changes will be to the white-collar exemptions, here are some educated guesses from some employment law experts:

  • An increase in the minimum salary threshold
    There’s speculation that the current threshold of $455 per week/$23,660 per year could more than double to $970 per week/$50,440 per year.
  • Exempt duty standards will change
    Following California’s current requirements, standards could change to employees needing to engage in exempt duties at least 50 percent of the time.
  • Executive exemption standards will change
    In an effort by the DOL to change or eliminate the primary duty standard, executive exemption could be lessened.

As we said, these are just highly educated guesses. So whatever happens with the FLSA proposed rule, the main lesson here is to be prepared.

 

 

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November 1, 2013

HR Fact Friday: FICA Adjusts–Income Subject to Payroll Tax Increases in 2014

Filed under: Salaries & Pay — Tags: , , , 6:00 am

Earnings up to $117,000 hit by Social Security FICA tax; more will face Additional Medicare Tax

While the typical U.S. employee may expect to earn a bit more in 2014, high earners will find that more of their salary is subject to Social Security payroll taxes. And since income thresholds are not inflation adjusted for the Additional Medicare Tax on high earners, more employees will pay this extra levy as well.

On Oct. 30, 2013, the Social Security Administration (SSA) announced that the maximum amount of earnings subject to the Social Security payroll tax will increase to $117,000 from $113,700, beginning Jan. 1, 2014. Of the estimated 165 million U.S. workers who will pay Social Security payroll taxes in 2014, about 10 million will pay a higher amount as a result of the inflation-based increase in wages subject to Social Security withholding.

Social Security and Medicare payroll withholding are collected together as the Federal Insurance Contributions Act (FICA) tax.

By Jan. 1, U.S. employers should:

  • Adjust their payroll systems to account for the higher taxable maximum under the Social Security portion of FICA.
  • Notify affected employees that more of their paychecks will be subject to FICA.

Withholding Rates Unchanged

The portion of the Social Security FICA tax that employees pay remains unchanged at the 6.2 percent withholding rate. Correspondingly, the portion of the tax that employers cover also remains at 6.2 percent of employee wages. This amounts to a total Social Security FICA tax of 12.4 percent.

These rates are set by statute and are not adjusted annually based on inflation. Except for a temporary 2 percent cut in the employee portion of the Social Security payroll-tax rate, which took effect in 2011 and ended in January 2013, they have been in place since 1990.

The IRS will issue payroll withholding tables for 2014, which will be available at www.IRS.gov.

Maximum Withholding

In 2014, with the higher income ceiling, the maximum yearly Social Security tax withholding amount rises to $7,254 (6.2 percent withholding on earnings of up to $117,000), up from $7,049.40 (6.2 percent withholding on earnings of up to $113,700).

Source: SHRM.org, 10/30/2013, Stephen Miller, CEBS  

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September 27, 2013

HR Fact Friday: EEOC News Briefs

Filed under: Salaries & Pay — Tags: , 6:00 am

Recently, the Equal Employment Opportunity Commission (EEOC) has been involved with several interesting news briefs. First, the EEOC has identified gender pay disparity as an issue on which it will focus in the coming year. An EEOC spokesperson noted that few claims allege pay disparity, but when the EEOC digs further in a gender discrimination charge, it commonly finds examples of it. Second, the EEOC is encouraging employers to participate in its mediation program, which the agency says resolved some ninety percent of the claims submitted to it during the past year. Finally, the EEOC has been ordered to pay almost $5 million in fees to the defendant in an employment case it filed and lost in Iowa federal court. The court found that the EEOC’s decision to pursue the claims in that matter was not reasonable.

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September 11, 2013

Minimum Wage Myth Busters

Filed under: Salaries & Pay7:00 am

There has been much debate as to whether the federal minimum wage should be raised and how high.  We want to share with you some thoughtful information from the US Department of Labor regarding the federal minimum wage that we hope will provide an understanding of some of the misinformation that readily circulates.

Myth:  The federal minimum wage is higher today than it was when President Reagan took office.

Not true:  While the federal minimum wage was only $3.35 per hour in 1981 and is currently $7.25 per hour in real dollars, when adjusted for inflation, the current federal minimum wage would need to be more than $8 per hour to equal its buying power of the early 1980s and more than $10 per hour to equal its buying power of the late 1960s. That’s why President Obama is urging Congress to increase the federal minimum wage and give low-wage workers a much-needed boost.

Myth:  Raising the federal minimum wage won’t benefit workers in states where the hourly minimum rate is already higher than the federal minimum.

Not true:  Only 19 states and the District of Columbia have a minimum wage higher than the federal minimum, meaning a majority of states have an hourly minimum rate at or below the federal minimum. According to an analysis from the White House Council of Economic Advisors, increasing the federal minimum wage will boost the earnings for some 15 million low-wage workers nationwide. That includes workers in those states already earning above the current federal minimum. Raising the federal minimum wage is an important piece of our overall economic recovery. A raise for minimum wage earners will put more money in more families’ pockets, which will be spent on goods and services, stimulating economic growth locally and nationally.

 

Source:  www.dol.gov

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August 9, 2013

HR Fact Friday: Court Strikes DOL 2010 Letter on Loan Officer Classifications

Filed under: Salaries & Pay — Tags: , 6:00 am

A federal appeals court has invalidated a 2010 United States Department of Labor (DOL) opinion letter that required financial institutions to classify their mortgage loan officers (MLOs) as nonexempt under the Fair Labor Standards Act (FLSA). The 2010 letter had reversed previous DOL statements that MLOs are exempt employees. The federal appeals court struck down the DOL’s procedure for concluding that MLOs were nonexempt, but it did not issue an opinion on the substantive merits of the issue. Thus, DOL can still reach the same conclusion if it now follows the right procedure of announcing a proposed rule, getting comment on the same and then finalizing the rule. DOL also may appeal the ruling. Moreover, Plaintiff’s lawyers can still sue employers if they classify MLOs as exempt, and the 2010 DOL letter, while invalidated, still paints a path for such lawsuits. Finally, in response to the 2010 letter, many financial institutions re-classified their MLOs as nonexempt. There could be a lot of disruption changing them to exempt now when it is not absolutely clear that such a classification will stick. All this suggests that financial institutions should probably leave their MLOs classified as nonexempt for the time being and see how all this shakes out in the next few weeks and months.

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July 24, 2013

The Numbers Are In!

Filed under: Compease,Compensation,Salaries & Pay6:00 am

The average pay increase employees may expect in 2014 is 2.9% according to an article from CNNMoney, with the findings of Mercer’s Rewards, a consulting business.   This is up slightly from an average of 2.8% in 2013.  However, this is a significant increase from early in the recession when increases in 2009 were averaging 2.1%, if increases were happening at all.  Because of the continued high rate of unemployment in June of 7.6%, employers still manage to have their pick of the talent pool without having to bust their budgets, keeping tighter reins on recruitment and retention costs.

Other factors affecting wages are the costs associated with retirement benefits and the still cloudy path of health care benefits under the Affordable Care Act.  Employers will eventually have to increase wages to remain competitive.  Jeanie Adkins, a partner of Mercer’s Rewards, stated, “Employers recognize that their greatest challenge is to retain their top performers to avoid post-recessionary flight.  This means they have to reward them.”

Possessing a good compensation philosophy is crucial to managing your salary budget, meeting key business strategies, and keeping employees contented.  It reassures employees that you are well-equipped with the current market trends, aware of current and future workforce needs, and are paying them a fair wage.  If you don’t have a compensation philosophy, you need one and we can help!

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June 7, 2013

HR Fact Friday: Wage and Hour Claims Continue to Proliferate

Filed under: Salaries & Pay — Tags: , , 6:00 am

As performance and compensation specialists HRN Performance Solutions works with nearly 1000 clients annually to ensure they are paying their workforce according to current market rates for location, industry, employee position, responsibility and performance level. I know from firsthand experience how important it is to a company to manage workforce compensation cost, both from a fiduciary/competitive responsibility but also from a workforce retention standpoint. Companies don’t want to lose top performers. Why then do we continue to see that companies will invest in paying HR consultants to provide and analyze salary survey data and advise them on compensation matters but will be completely in the dark when it comes to basic payroll matters such as overtime or exempt vs. non-exempt classification.

For example, Corporate Counsel magazine recently reported that the number of wage and hour lawsuits filed against employers in federal court have increased for the fifth straight year. Claims are up 10% over a twelve month period measuring part of 2012 and three months of 2013. Typically, these are claims brought under the Fair Labor Standards Act (FLSA) involving misclassified employees seeking overtime pay, hourly workers claiming they were not paid for all hours worked, or restaurant workers claiming they were not properly paid under tip credit rules. Wage and hour claims can also result from state law issues. For example, a national coffee company recently had to pay $3 million for allegedly not providing California employees with required meal breaks and for issuing inaccurate wage statements.

I don’t mean to suggest that the ‘rules’ for payroll matters are easy to understand and apply. They vary by state and in some instances the language is difficult to understand and can be open to interpretation. However when headlines such as those made by the national coffee chain noted above become commonplace, as they are today, doesn’t it make sense to review all wage and hour pay policies for overtime, breaks, tips, position classification, etc. with an experienced legal advisor to avoid very expensive and negative litigious legal proceedings. Employees are much better informed today and jury’s are historically sympathetic to the worker vs. employer during periods of economic challenge and high unemployment. As the saying goes . . . an ounce of prevention . . .

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May 31, 2013

HR Fact Friday: New York Club Settles Exotic Dancer Employment Claims

Filed under: Salaries & Pay — Tags: , 6:00 am

I recently read that a “gentlemen’s” club in New York City has agreed to pay almost $9 million to settle a case brought by some 1,200 of its current and former exotic dancers who claimed they had been misclassified as independent contractors rather than employees. The plaintiffs also claimed they were not paid overtime or minimum wage, that their fees were confiscated and that the employer failed to pay for their…wait for it…uniforms. Stripped down to its bare bones, this lawsuit is clear evidence of the naked truth about employment law…no one is immune.

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May 17, 2013

HR Fact Friday: Reminder on Unpaid Interns

Filed under: Salaries & Pay — Tags: , 6:00 am

With summer on the approach, remember to be cautious in bringing aboard any unpaid interns. The bottom line on interns is that they must be paid unless they are basically just watching, i.e. the organization cannot derive any immediate advantages from the activities of the intern. Most employers will pay interns because they typically cannot set up a scenario where they derive no benefit from an intern’s work.  Click here for the link to the U.S. Department of Labor (DOL) fact sheet.

This fact sheet lays out this test for unpaid interns. It reads: “There are some circumstances under which individuals who participate in ‘for-profit’ private sector internships or training programs may do so without compensation. The Supreme Court has held that the term ‘suffer or permit to work’ [under the Fair Labor Standards Act] cannot be interpreted so as to make a person whose work serves only his or her own interest an employee of another who provides aid or instruction. This may apply to interns who receive training for their own educational benefit if the training meets certain criteria. The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each such program.

The following six criteria must be applied when making this determination:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.”
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April 24, 2013

“Say Cheese!” – Biometric Time Clocks Coming to a Workplace Near You!

Filed under: Salaries & Pay6:00 am

Biometric time clocks are making their arrival at numerous businesses around the country.  But, what is a biometric time clock and how does it work?  Biometric time clocks create digital records of when an employee comes to work (clocking in) and when he leaves (clocking out).  You may ask what is so different about that.  It is because you are the only you!  Only your smile (facial recognition), your fingerprint, or your vein patterns can clock you in creating a digital audit trail.  No more buddy punching by coworkers clocking each other in and out!

Workforce.com reported on a study conducted in 2009 by Harris Interactive, Inc.  The study revealed that “21 percent of hourly employees admit to stealing company time.  While only 5 percent participated in buddy punching, 69 percent said they punch in and out earlier or later than scheduled, 22 percent put additional time on their time sheet, and 14 percent didn’t punch out for unpaid lunches or breaks.”  These practices are all dishonest which is why some companies have implemented biometric systems to curtail fraudulent activities robbing them of valuable time and money.  Others utilize biometric time clocks for efficiency, thus significantly cutting the time it takes to process their payrolls.

Recently, Daniyal Enterprises, LLC and its owner, Waseem Chaudhary along with other companies operated by Chaudhary, have agreed to pay $2 million in overtime back wages and an additional $1 million in liquidated damages to 417 workers employed at 72 of Chaudhary’s New Jersey gas stations after investigations by the U.S. Department of Labor’s (DOL) Wage and Hour Division found violations of the Fair Labor Standards Act (FLSA).  The DOL reported that employees often worked up to 84 hours per week, but did not receive overtime pay.  Many were paid partly on the payroll and partly off the books, sometimes in cash, to disguise the improper payment of overtime.  The company failed to maintain accurate records of the hours employees worked, which is a requirement of the FLSA.  The company will have to abide by a three-year monitoring program designed by the DOL.  What was interesting is that it included the installation of biometric time clocks in each establishment.  What used to be only a high-security government clearance tool or a sci-fi looking gadget may soon make its way into your workplace.

We would like to know what you think about biometric time clocks!

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