Tag Archives: compensation

Final Overtime Rules for Private & Public Sector Employers

 

Unknown(Post by Rick Dacri, June 1, 2016)

The Department of Labor’s (U.S. DOL) changes to overtime eligibility have been approved and are scheduled for a December 1, 2016 implementation. The waiting is over and all employers need to immediately prepare. No one will be able to avoid this.

I have outlined below a summary of the changes that apply to both private and public sector employees. Remember, this is a summary and does not constitute a complete review of all the changes to the rules nor should it be considered legal advice.

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

  1. Sets the salary threshold under which employees would be nonexempt—required to receive overtime pay (regular hourly rate x 1.5 for all hours worked beyond 40 hours per week) at $913 per week or $47,476 annually for a full-year worker, more than doubling the salary threshold from the current level of $23,660.
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test, to $134,004; and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years.
  4. Additionally, 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.

Earning above the $47,476 annual ($913 per week) salary level do not automatically classify an employee as exempt from mandatory overtime pay, as the duties test still comes into play.

This is a significant change to the law and all employers should review their plans now, before the December 1, 2016 implementation. Don’t wait, as changes will be complex and contain plenty of pitfalls.

To avoid problems with existing exempt workers currently being paid less than the new threshold, your options include:

  1. Reclassify affected workers as nonexempt, or
  2. Increase the employees’ salaries to at least $47,476, or
  3. Reduce the hours of these workers, or
  4. Pay a lower hourly rate so that, when multiplied by time-and-one half, weekly compensation remains unchanged

As I have noted in previous posts, none of these steps are ideal and are likely to result in employee relation issues and increased payroll costs. To make matters worse, the DOL has stepped up enforcement, expecting to dole of the law out fines, attorney fees and back pay for violations.

Rules for State and Local Governments:

The FLSA contains several provisions unique to state and local governments, including compensatory time off, under certain provisions.

  • Comp Time: State or local government agencies may arrange for their employees to earn comp time instead of cash payment for overtime hours.
  • Fire and police small-agency exemption: The FLSA also provides an exemption from overtime protection for fire protection or law enforcement employees, if they are employed by an agency that employs fewer than five fire protection or law enforcement employees, respectively.
  • Work periods rather than workweeks for fire protection or law enforcement employees: Employees engaged in fire protections or law enforcement may be paid overtime on a “work week period” basis, rather than the usual 40-hour work week of the FLSA.

Not Affected by Changes:

Many employees won’t be affected by the final rule:

  1. Hourly workers: The new threshold will have no impact on the pay of workers paid hourly.
  2. Workers with regular workweeks of 40 or fewer hours: To the extent that many salaried white-collar staff have jobs where they work no more than 40 hours, the changes to the overtime rules will have no effect on their pay.
  3. Law enforcement and fire protection employees who regularly work hours that conform to the longer work periods permitted for such employees, the changes will also not impact their pay.
  4. Workers who fail the duties test: Salaried workers who do not primarily perform executive, administrative, or professional duties are not eligible for the white-collar overtime exemption and therefore are not affected by the final rule.
  5. Highly compensated workers: White collar workers who fail the standard duties test but are “highly compensated”—earn more than $134,004 in a year—are almost all ineligible for overtime under the highly compensated employee exemption, which has a minimal duties test.
  6. Police and fire employees in small agencies: Fire protection or law enforcement employees in public agencies with fewer than five fire protection or law enforcement employees respectively will continue to be exempt from overtime.
  7. Elected officials, their policymaking appointees, and their personal staff and legal advisors who are not subject to civil service laws
  8. Public employees who have a comp time arrangement

To avoid problems and lawsuits:

  • Audit your compensation program and pay practices for compliance
  • Review the classification of all exempt workers, particularly those being paid under $47,476
  • Put in place a safe harbor policy, which states that if an employee feels he/she has been incorrectly paid, to bring it to your attention for review.

Develop a plan now to implement before the December 1 deadline. If you have questions, contact the Dacri HR HelpLine.

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Filed under Compliance, Uncategorized

Toughest Jobs To Fill in 2016

(Post by Rick Dacri, November 19, 2015)

hiring

According to a survey by CareerCast.com and reported in HR Magazine, the 10 toughest jobs to fill in 2016 will be:

  1. Data Scientist
  2. Electrical Engineer
  3. General and Operations Manager
  4. Home Health Aide
  5. Information Security Analyst
  6. Marketing Manager
  7. Medical Services Manager
  8. Physical Therapist
  9. Registered Nurse
  10. Software Engineer

I don’t think many employers will be surprised by this list. My public power clients are continuously challenged to recruit and retain electric engineers and general managers. Both positions are also impacting their salary structures.

Expect to see continued difficulty recruiting these positions. Employers should put in place an effective recruitment and retention strategy that includes a review of their salary structure. Its become a candidate’s market.Call me if you’d like to discuss.

Other Posts you may like:

  1. 7 Ways to Measure Your Recruitment Brand
  2. Compensation Trends: What You Must Know and Do
  3. Recruitment: Why Job Searches Fail & 6 Steps that Guarantee Success

 

 

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Filed under executive recruitment, Help Wanted, Uncategorized

2016 Compensation Trends (Webinar)

 

(Webinar by Rick Dacri, November 12, 2016)

payI recently lead a webinar focusing on compensation trends, what we can expect to see for pay raises in 2016, the expected doubling of the minimum salary for exempt employees in 2016, and how to eliminate some costly wage & hour violations.

If you would like to hear or part of this 57 minute webinar, click Dacri Compensation Webinar.

Let me know what you think in the comment section below and let me know what percentage increase for pay raises your company expects to give in 2016.

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Filed under Compensation, Compliance, Uncategorized

Pay Increases & Trends for 2016

pay(Post by Rick Dacri, November 2, 2015)

Pay increases for 2016 are expected to remain at 3%, the same as 2015 and up from 2014’s 2.5%. Exceptional performers are likely to enjoy increases in the 4.5% range.

Regionally, wages should be higher in the Northeast. Critical, hard to find and retain positions, such as electric and software engineers, line workers, nurses and IT will demand and get more.

Employers continue to find it difficult to recognize and motivate workers with merit budgets of only 3%. It is nearly impossible to differentiate between good and average performers with so little money. As a result, more are turning to annual short term incentive plans. These plans can quickly put cash in worthy employee’s pockets and not impact base wages. Employers are also putting more dollars into benefits, particularly into supplemental retirement plans for “older” workers.

In addition to compensation, companies are relying upon non-monetary rewards including career development, education and more exciting and challenging work assignments.

If you would like to explore options for your company, call me at 207-229-5954 or rick@dacri.com.

Other posts you may like:

  1. Compensation Trends & Pitfalls (Webinar)
  2. Overtime Eligibility to Double: Prepare for Changes
  3. FLSA: Record Keeping Requirements

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Filed under Compensation, Compliance

Compensation Trends & Pitfalls What You Must Know and Do (Webinar)

images-2Proposed changes in the Department of Labor overtime rules will force you to make significant changes to your pay and benefit structure; a changing economic market is driving wages upward; and an increasing number of wage and hour lawsuits has all put compensation at center stage.

In this one-hour webinar, scheduled for November 12th at 2PM, Rick Dacri will show where wages are going in 2016; how to prepare for the 2016 proposed changes to the overtime rules; and how to avoid the most common wage and hour violations.

This webinar is designed for all executives, managers, supervisors and HR professionals—anyone who supervises staff.

In this 60-minute webinar, you will learn:

  • What the expected pay increases will be in 2016
  • What will be the important 2016 compensation trends you should know
  • How to remain competitive when new hires are driving pay upward
  • Strategies to address the proposed doubling of the overtime minimum
  • A definitive way to differentiate between a salary and hourly position
  • Understanding if you must pay someone who does work on his or her time
  • Knowing when you can deduct pay from a salaried worker
  • Methods to correct mistakes in employee’s pay
  • Pay requirements when employees work through lunch, at home, or before the start of a shift
  • Avoiding mistakes in paying Independent Contractors
  • Whether you can prevent employees from discussing their pay

These are just some of the things we will cover in this packed webinar. In addition, by attending, you will also receive a copy of the PowerPoint slides and 3 white papers (Understanding Exempt Status under the FLSA; FLSA Fair Pay Questionnaire; and Improper Deductions of salaried workers).

The entire program is just $125 (my clients will receive a complimentary pass). To enroll, simply email (rick@dacri.com) or call me (207-229-5954). It’s that easy. I’ll take your information and you can send me a check.

Got questions? Give me a call and I’ll give you an answer.

Sound good. Then sign up now…and tell your colleagues too!

You may want to read:

Compensation Trends and Pitfalls: What You Must Know and Do

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Filed under Compensation

Compensation Trends and Pitfalls: What You Must Know and Do

can of worms(Post by Rick Dacri, October 15, 2015)

What and how you pay your workers is becoming a major issue managers are being forced to address. The ability to recruit and retain star employees is driving wages upward. And both the states and federal government are zoning in on wage violations, while at the same time proposing stricter, more costly guidelines.

In this post, I will outline some key compensation trends and the potential pitfalls which could prove very costly to you and your organization.

  1. Wage Growth: expect to see a steady increase in wages. In 2014, we saw a 2.5% increase followed by 3% this year. Plan on another 3% in 2016. The Northeast has been experiencing greater growth and certain positions, such as electrical engineers, IT, line workers and nurses are demanding and getting greater increases. Review all your wages to ensure they are in line.
  2. Wage Equity: Recruitment is impacting existing wage programs. The need to pay job candidates higher wages than your current employees to get them to accept your job offer is throwing internal equity out of whack. Employers must remain competitive to attract talent, but you must also maintain parity so as to retain your current employees. It’s a difficult balancing act. Review your compensation program to insure you have both internal and external competitiveness and equity. As a best practice, this type of study should be done every 2 years. (As an aside, I have been asked to conduct several compensation reviews and analyses just this year).
  3. Wage Violations: There are a wide range of wage regulations that are getting significant attention. The Fair Labor Standards Act (FLSA) is one of the employment laws that employers frequently violate, often without intent and knowledge that they have gone afoul of the law. Unfortunately, intent is not a good defense and the consequences are severe and include 2-3 years back pay for each infraction, legal fees and in extreme cases, criminal penalties. Here are some of the problem areas:
  • Misclassification of salaried workers (exempt versus non-exempt): You cannot simply pay an individual a salary to avoid paying overtime. The Department of Labor has developed a complex testing process to determine whether a job is legitimately exempt or not. You should review and test all your salaried positions to ensure they meet the requirements. Here is the DOL link to the test. Call me if you need help.
  • Prohibited deductions of exempt employees wages: You cannot arbitrarily reduce the wages of an exempt worker for missing work or leaving early to go to the dentist. In doing so, you jeopardize the position’s exempt status and frankly, open up a huge can of worms. I have developed a white paper on making proper deductions. Give me a call and I will send it to you.
  • Failure to pay for all time worked: This is a big problem. While Wal Mart continues to grab the headlines for these violations, I regularly get calls from clients on my HR HelpLine concerning obligation to pay for work done off the clock, work being done during breaks, eligibility for comp time (both for municipal and private sector workers), requiring workers to be on-call, storm closings, travel pay, and expecting all workers to monitor and respond to emails and calls 24/7. Review your policies and procedures to ensure employees are properly paid.
  • New Proposed White Collar Regulations. The DOL is proposing to increase the means test requirement (that’s the minimum dollar amount you must pay a salaried worker) to $50,444, up from $23,660. If this passes for 2016, and many experts believe it will, that will double the amount required. Prepare now by reviewing every exempt worker you have; determine whether they fall below the threshold; and then develop a strategy around how you will deal with this issue. There are a variety of options. Call me if you need help.
  • Independent Contractors: For the last few years, the various states, IRS and DOL have been hammering employers who employ Independent Contractors. In many cases they have declared these contractors as employees and have required employers to pay back pay, back taxes, workers comp, unemployment comp, and back benefits to the workers. Each state has their own tests and the IRS has another. Before you hire an Independent Contractor, test the position. Here’s the IRS test.
  • Student Interns: While most unpaid student interns meet the required educational standards, DOL has been clamping down on abusers. Follow the 6 criteria point test to ensure you are not in the wrong.

Listed above are just some of the trends and pitfalls. What you should do now includes:

  1. Auditing your compensation and pay practices today.
  2. Making sure your entire compensation program is up-to-date, compliant and competitive.
  3. And, If you need assistance, give me a call.

Other Dacri posts you should read:

  1. FLSA Record Keeping Requirements
  2. How to Comply with Massachusetts Minimum Wage Increase
  3. Linkedin Gets Burned for Overtime Violations
  4. Overtime: Should Holidays and Vacation be Included?

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Filed under Compensation, Department of Labor, exempt, exempt nonexempt, FLSA, human resources, independent contractos, student interns, trends 2016, wage increase

FLSA: Record Keeping Requirements

Unknown(Post by Rick Dacri, October 1, 2015)

The U.S. Department of Labor is stepping up its enforcement of misclassifying workers as exempt and failing to maintain records on non-exempt workers. This post outlines the record keeping requirements under the Fair Labor Standards Act (FLSA as noted in the DOL’s Fact Sheet #21.

All employers should regularly review the classification of all their exempt employees and secondly, audit the records of their nonexempt employees.

What Records Are Required: Every covered employer must keep certain records for each non-exempt worker. The Act requires no particular form for the records, but does require that the records include certain identifying information about the employee and data about the hours worked and the wages earned. The law requires this information to be accurate. The following is a listing of the basic records that an employer must maintain:

  1. Employee’s full name and social security number.
  2. Address, including zip code.
  3. Birth date, if younger than 19.
  4. Sex and occupation.
  5. Time and day of week when employee’s workweek begins.
  6. Hours worked each day.
  7. Total hours worked each workweek.
  8. Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”)
  9. Regular hourly pay rate.
  10. Total daily or weekly straight-time earnings.
  11. Total overtime earnings for the workweek.
  12. All additions to or deductions from the employee’s wages.
  13. Total wages paid each pay period.
  14. Date of payment and the pay period covered by the payment.

How Long Should Records Be Retained: Each employer shall preserve for at least three years payroll records, collective bargaining agreements, sales and purchase records. Records on which wage computations are based should be retained for two years, i.e., time cards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages. These records must be open for inspection by the Division’s representatives, who may ask the employer to make extensions, computations, or transcriptions. The records may be kept at the place of employment or in a central records office.

What About Timekeeping: Employers may use any timekeeping method they choose. For example, they may use a time clock, have a timekeeper keep track of employee’s work hours, or tell their workers to write their own times on the records. Any timekeeping plan is acceptable as long as it is complete and accurate.

If you need help determining whether you have properly classified your employees, give me a call.

Other Posts you Might Like:

  1. Pay Procedures: How To Avoid Wage and Hour Problems
  2. Overtime Eligibility To Double: Prepare For Change
  3. Misclassification of Independent Contractors in IRS Crosshairs

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Filed under Compliance, Department of Labor, DOL, exempt, exempt nonexempt, FLSA, human resources, misclassification, nonexempt, record keeping