DOL Final Rule - Overtime
•Télécharger en tant que PPTX, PDF•
1 j'aime•155 vues
DOL Overtime Rule... changes are coming quickly. Are you ready?
Recommandé
Contenu connexe
Tendances
Tendances (20)
En vedette
En vedette (19)
Similaire à DOL Final Rule - Overtime
Similaire à DOL Final Rule - Overtime (20)
Dernier
Dernier (20)
DOL Final Rule - Overtime
- 1. DOL Final Rule: The Bottom Line for Small Business SEPTEMBER 15, 2016 Sarah Alexander, PHR, SHRM-CP Owner / HR Business Partner
- 2. Objective • CLARITY – DOL Final Rule guidelines • DEFINITION – Exempt vs. Nonexempt, EAP, 3 Factor test, Catch up provisions • IMPACT – Money, Managers, Motivation • COMMUNICATION – Who? When? How? • NEXT STEPS – Where to go from here?
- 3. DOL Final Rule • $47,476 or $913/week • HCE $134,004 • Nondiscretionary bonus and incentive payments to satisfy up to 10% of the new standard salary level • Effective Date – December 1, 2016 • Auto updates every 3 years first January 2020
- 4. Employer Options for Compliance • Reclassify employee(s) and pay overtime for overtime work • Reclassify employee(s) and limit employee(s) hours to 40 per week • Raise employee(s) salaries above the new threshold • Evaluate and realign hours and staff workload
- 5. How did we get here? • DOL (gov. body), WHD (division) & the FLSA (Act) – in fiscal year 2015, WHD had 21,138 cases with violations, $246 million in back wages, affecting over 240,000 employees • BLURRED LINES - job duties test no longer sufficient in defining exempt status • WORKING HOURS & HOURLY WAGES - workplace flexibility has lead to overworked/underpaid • COST OF LIVING - last change to salary level in 2004 while the average cost of living has increased over 26% over the last 10 years
- 6. What does it all mean? • Non-exempt vs. Exempt • EAP Exemptions – Executive, Administrative, and Professional (Learned & Creative), Highly Compensated Executive • 3 Factor Test – salary basis, salary level, job duties • Primary Duties • Non-Discretionary bonuses • Catch Up Provision
- 7. Executive Exemption Exemption Salary Level Test Salary Basis Test Duties Test Executive At least $913 / week ($47,476 / year) • At least 90% of the salary level ($822 / week) must be paid on a “salary” basis • Up to 10% ($91 / week) may be satisfied with nondiscretionary bonuses or incentive payments • Primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise • Must customarily and regularly direct the work of at least two or more other full- time employees or their equivalent • Authority to hire or fire other employees, or suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
- 8. Administrative Exemption Exemption Salary Level Test Salary Basis Test Duties Test Administrative • At least $913 / week ($47,476 / year) • “Academic administrative personnel” may qualify with a salary at least equal to the entry salary for teachers at their educational establishment. • At least 90% of the salary level ($822 / week) must be paid on a “salary” or “fee” basis • Up to 10% of the salary level ($91 / week) may be satisfied with nondiscretionary bonuses or incentive payments • The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
- 9. Professional Exemption Exemption Salary Level Test Salary Basis Test Duties Test Professional Salary Level & Salary Basis requirements do not apply for doctors, lawyers, and teachers • At least $913 / week ($47,476 / year) • At least 90% of the salary level ($822 / week) must be paid on a “salary” or “fee” basis • Up to 10% of the salary level ($91 / week) may be satisfied with nondiscretionary bonuses or incentive payments Learned Professional • The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment • The advanced knowledge must be in a field of science or learning and must be customarily acquired by a prolonged course of specialized intellectual instruction.
- 10. Professional Exemption Exemption Salary Level Test Salary Basis Test Duties Test Professional Salary Level & Salary Basis requirements do not apply for doctors, lawyers, and teachers • At least $913 / week ($47,476 / year) • At least 90% of the salary level ($822 / week) must be paid on a “salary” or “fee” basis • Up to 10% of the salary level ($91 / week) may be satisfied with nondiscretionary bonuses or incentive payments Creative Professional • The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor • Generally includes such fields as, music, writing, acting and the graphic arts
- 11. HCE Exemption Exemption Salary Level Test Salary Basis Test Duties Test Highly Compensated Executive • $134,004 per year in total compensation, including payment of at least $913 / week • 100% of the standard salary level ($913 / week) must be paid on a “salary” or “fee” basis • The remainder of the HCE total annual compensation requirement may be paid in nondiscretionary bonuses or incentive payments (including commissions) • The employee’s “primary duty” must be office or non- manual work • Must “customarily and regularly” perform any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee
- 12. Computer Exemption Exemption Salary Level Test Salary Basis Test Duties Test Computer • At least $913 / week ($47,476 / year), or at least $27.63 / hour • At least 90% of the salary level ($822 / week) must be paid on a “salary” or “fee” basis unless the employee is paid on an hourly basis and receives at least $27.63 / hour • Up to 10% of the salary level ($91 / week) may be satisfied with nondiscretionary bonuses or incentive payments • The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field
- 13. Computer Exemption (cont.) Exemption Salary Level Test Salary Basis Test Duties Test Computer The employee’s primary duty must consist of: • The application of systems analysis techniques and procedures, to include consultation • The design, development, documentation, analysis, creation, testing or modification of computer systems or programs • The design, documentation, testing, creation or modification of computer programs related to machine operating systems
- 14. O U T S I D E S A L E S The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and The employee must be customarily and regularly engaged away from the employer’s place or places of business. The salary requirements of the regulation do not apply to the outside sales exemption. Exempt from both minimum wage and overtime requirements.
- 15. C O M M I S S I O N the employee must be employed by a retail or service establishment, and the employee's regular rate of pay must exceed one and one- half times the applicable minimum wage for every hour worked in a workweek, and more than half the employee's total earnings in a representative period must consist of commissions. Retail and service establishments - defined as establishments 75% of whose annual dollar volume of sales of goods or services (or of both) is not for resale and is recognized as retail sales or services in the particular industry. The salary requirements of the regulation do not apply to the commission based exemption. Exempt only from overtime requirements.
- 16. Business Impact – Money, Managers, Motivation MONEY • 4.2 million workers extended right to overtime pay • According to the Department of Labor, employers will spend an estimated $592.7 million to comply with the new rule and it will cost $254.5 million for businesses to become familiar with the regulation; then another $160.1 million to make necessary adjustments; and $178.1 million in managerial costs. • In addition, the DOL estimated the cost from employers to workers will be $1.48 billion, with $1.39 billion of that resulting in more overtime compensation or increased salaries • Have you evaluated your options and calculated your costs? Map provided by the Department of Labor
- 17. 4 7 4 7 6 5 hours of OT/week 10 hours of OT/week 5 hours of OT/week 10 hours of OT/week 5hrs X 50 wks = 250 hrs 10hrs x 50 wks = 500 hrs 5hrs X 50 wks = 250 hrs 10hrs x 50 wks = 500 hrs 250 hrs x $25.25 = $6,312.50 500 hrs x $25.25 = $12,625 250 hrs x $28.85 = $7,212.50 500 hrs x $28.85 = $14,425 $35,000 + $6,312.50 = $41,312.50 $35,000 + $12,625 = $47,625 $40,000 + $7,212.50 = $47,212.50 $40,000 + $14,425 = $54,425 $35,000 annual salary ($16.83/hour, OT rate $25.25/hour) $40,000 annual salary ($19.23/hour, OT rate $28.85/hour)
- 18. Business Impact – Money, Managers, Motivation MANAGERS • Change in Status (Self & Employees) • Perception • Communication • Training • Job and Workplace Changes • Resetting Expectations
- 19. Business Impact – Money, Managers, Motivation MOTIVATION • Keep it simple • Communicate, Train, and Follow up • Minimize change • Make adjustments • Up the rewards
- 20. While we are on the subject… INDEPENDENT CONTRACTORS • DOL – economic realities test • IRS – 20 Factor Test
- 21. Next Steps • Perform cost analysis on employees that are below the designated salary level • Redesign/Revamp comp structure to alleviate salary compression • Review status change impact on employee benefits - contact broker/rep to see how changes will affect employees • Update handbooks/develop policies - OT approval procedures, timekeeping procedures, PTO accruals, remote work, business travel • Communicate with affected employees • Document status changes in writing • Hire new employees to fill gaps • Procure timekeeping system that meets business needs - mobile access for remote workers, "auto" timekeeping • Train managers & employees on timekeeping system & procedures
- 22. Questions? Please contact us: www.results-hr.com sarah.alexander@results-hr.com (865) 679-1980 Want MORE? Follow us on social media
Notes de l'éditeur
- EAP: Previous salary of $23,600 or $455/week HCE: Previous salary of $100,000 How determined – 40th percentile of earnings of FT salaried workers in the lowest-wage Census Region, currently the South, for HCE the annual equivalent of the 90th percentile of FT salaried workers nationally
- ***Limiting hours – written policy & approval process , NO COMP TIME, BUT you can redefine workweek (i.e. Mon – Sun)
- Non-exempt – not exempt from overtime compensation or the minimum wage…in other words they must be paid at least the minimum wage (federal or state) and be compensated for all time worked (at a rate of 1.5 times their regular rate of pay) in excess of 40 (some states over 8 hours in a Exempt – exempt from OT & at times exempt from minimum wage requirements EAP Exemptions – Acronym for the Executive, Administrative, Professional & includes HCE as the primary duties for this individual must fall under one of these categories Salary basis – means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee's work. Salary level – Primary Duties – means the principal, main, major or most important duty that the employee performs. Based on what they actually do vs. what the job title or job description states. Non-discretionary bonuses – he employer predetermines the specific criteria that is required to receive a bonus. Employees expect to earn the bonus if they meet the criteria. An employer's incentive pay plan that provides additional compensation for exceeding performance or productivity goals Discretionary – not guaranteed (Christmas bonus, retention bonus, referral bonus, etc.) Catch up Provision – option provided to employers that determine that employee(s) did not earn enough (salary, nondiscretionary bonuses and incentive payments (including commissions) in a given quarter to retain their exempt status. One pay period to make up for the shortfall & will count only toward the prior quarter's salary amount and not toward the salary amount in the quarter in which it was paid.
- Work “directly related to management or general business operations” includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, Internet and database administration; legal and regulatory compliance; and similar activities Independent Judgement Factors to consider include, but are not limited to: whether the employee has authority to formulate, affect, interpret, or implement management policies or operating “matters of significance” refers to the level of importance or consequence of the work performed. An employee does not exercise discretion and independent judgment with respect to matters of significance merely because the employer will experience financial losses if the employee fails to perform the job properly. Employees who operate very expensive equipment do not qualify.
- Fields of science or learning include law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, chemical and biological sciences, pharmacy and other occupations that have a recognized professional status and are distinguishable from the mechanical arts or skilled trades CPA’s are NOT exempt – they must be compensated at the new salary level or they must be paid OT
- requirements are generally met by actors, musicians, composers, soloists, certain painters, writers, cartoonists, essayists, novelists, and others as set forth in the regulations. Journalists may satisfy the duties requirements for the creative professional exemption if their primary duty is work requiring invention, imagination, originality or talent
- Not help desk, or technicians
- No change to this exemption – exempt from minimum wage & OT compensation More than 50% of time away from office – prospecting, meeting with customers, closing sales, onsite visits/follow up
- Exempt from OT compensation, but not the minimum wage DOL long list of recognized retail and service establishments CHALLENGE is proving 2 things: The employee was paid one & half times applicable minimum wage for every hour worked More than half of the employee’s total earnings in a representative period must consist of commissions How to PROVE? Must track employee hours – ee’s can document hours total per day Must evaluate employment compensation on a monthly or quarterly basis to determine whether they meet the 50% rule TRICKY!
- So now that we have defined all the terms & requirements… what’s the bottom line… how does it affect business? I have broken it down into the areas of greatest impact – Money, Managers, Motivation
- MANAGERS ARE GOING TO EITHER BECOME YOUR ALLY OR YOUR ENEMY PEOPLE – whether it be Managers or Employees make sure they understand that you do not value your non-exempt employees less, but because the law requires it. It is affecting businesses of all sizes and industries and everyone must comply. CHANGE IN STATUS - Many managers once exempt will now be non-exempt like their employees. Operationally exempt – tracking time PERCEPTION - “promotion” and “demotion”, overall value. Undeserved pay raises. Denial of pay. just simply a difference of being paid for the time you work (and at a premium) or working to make less (hour pay rate example) PREVIOUS RATE: $455/week (~$11.37/hour) 5 HOURS OF OT = $10.11/hour (11% decrease in pay) vs. $17.06/hr OT = $85.30/week = $4,265/year 10 HOURS OF OT = $9.10/hour (almost 20% decrease in pay) vs. $17.06/hr OT = $170.60/week = $8,530/year TALK ABOUT DEVALUED!!! COMMUNICATION – Who? How? When? Alignment TRAINING - new systems, processes, procedures JOB/WORKPLACE CHANGES – flexibility (hours / location), travel, benefits, hours restrictions, approvals EXPECTATIONS - guidelines, boundaries
- EE FRUSTRATIONS: Loss of Status or perceived value Tracking Time EE’s that are used to working until the job is done… feel like they can’t get it done Loss of flexibility or benefits KEEP IT SIMPLE – systems, processes, and plans …. determine course of action, make a plan, stay the course COMMUNICATE, TRAIN, FOLLOW UP – make sure your employees know what to do and when/how to do it, Be open & listen to their frustrations and allow them to be a part of the solutions MINIMIZE CHANGE – tasks, systems, pay, benefits, flexibility MAKE ADJUSTMENTS – don’t communicate the change and then stick your head in the sand… changes take a while to take hold and many bumps in the road can occur… keep your finger on the pulse and adapt when and where necessary REWARDS - – paid time off, volunteer time, formal recognition programs
- -In conducting an economic realities test, an employer should look to six factors, the DOL noted: The extent to which the work performed is an integral part of the employer’s business. The worker’s opportunity for profit or loss depending on his or managerial skill. The extent of the relative investments of the employer and the worker. Whether the work performed requires special skills and initiative. The permanency of the relationship. The degree of control exercised or retained by the employer. 20 Factor Test – to include IRS simplified into three categories: Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
- Now you have to decide what method you will choose - Planning for the future… financial impact